Political and Economic Analysis Chapter 3

Questions and Answers

What is an economy?

The way a nation makes choices about how to use its resources

What is capital?

Money needed to start a business

What is scarcity?

The difference between wants and needs on one hand and available resources on the other hand

What is the consumer price index?

Measure of the change of price over a set period of time of some 400 specific goods and services used by the average urban household Signup and view all the answers

What is a command economy?

In this type of economy the government answers three basic questions: what, how and for whom Signup and view all the answers

What is gross domestic product (GDP)?

A measure of goods and services produced using labor and property located in the United States Signup and view all the answers

What is inflation?

Rising prices Signup and view all the answers

What does infrastructure refer to?

Refers to a country's physical development - the state of its roads, ports, sanitation facilities, and utilities Signup and view all the answers

What is capitalism?

Economic system characterized by private ownership of businesses and marketplace competition Signup and view all the answers

What is employee productivity?

Measure of output divided by input of worker hours Signup and view all the answers

What is a business cycle?

Stages an economy goes through due to recurring slowdown and growth Signup and view all the answers

What is privatization?

The process of selling government-owned businesses to private individuals Signup and view all the answers

Study Notes

Key Economic Concepts

Economy: The framework through which a nation allocates its resources and manages choices.
Capital: Essential funds required for initiating a business venture.
Scarcity: The disparity between human wants and needs against the backdrop of available resources.

Economic Indicators

Consumer Price Index (CPI): Tracks price changes over time for around 400 specific goods and services, representing average urban household expenses.
Gross Domestic Product (GDP): Reflects the total value of goods and services produced within the U.S. using domestic labor and property.

Economic Models

Command Economy: A system where government authorities determine answers to fundamental economic queries: what to produce, how to produce, and for whom to produce.
Capitalism: An economic structure based on private ownership of businesses and competitive markets.

Additional Economic Dynamics

Inflation: The trend of increasing prices over time, affecting purchasing power.
Infrastructure: A country's foundational physical development, including the quality of roads, ports, sanitation, and utilities.

Productivity and Economic Fluctuations

Employee Productivity: Assessed by output per worker hour, indicating efficiency within the labor force.
Business Cycle: The pattern of economic growth and contraction, characterized by alternating periods of expansion and recession.

Privatization

Privatization: The transition of government-owned businesses into private ownership, aimed at enhancing efficiency and competitiveness.

Description

Explore key terms in Political and Economic Analysis with this flashcard quiz. Understand essential concepts like 'economy', 'capital', and 'scarcity' that shape economic decisions. Test your knowledge and enhance your grasp of economic foundations.