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Questions and Answers
What is a traditional economy?
What is a traditional economy?
- An economy focusing on one particular good.
- An economy where decisions are made by individuals.
- An economy controlled by the government.
- An economy in which production is based on customs and traditions. (correct)
What defines a command economy?
What defines a command economy?
- An economy focusing on a variety of goods.
- An economy where individuals make decisions.
- An economy based on customs.
- An economy controlled by the government. (correct)
What is a market economy?
What is a market economy?
- An economy based on customs.
- An economy focused on limited goods.
- An economy where decisions are made by individuals or the open market. (correct)
- An economic system under government control.
What is specialization in an economy?
What is specialization in an economy?
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What does opportunity cost refer to?
What does opportunity cost refer to?
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What does NAFTA stand for?
What does NAFTA stand for?
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What is a tariff?
What is a tariff?
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What is a quota?
What is a quota?
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What is an embargo?
What is an embargo?
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What does domestic refer to?
What does domestic refer to?
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What is an exchange rate?
What is an exchange rate?
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What is human capital?
What is human capital?
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What are capital goods?
What are capital goods?
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What does GDP stand for?
What does GDP stand for?
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Who is an entrepreneur?
Who is an entrepreneur?
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Study Notes
Economic Systems
- Traditional Economy: Production relies on customs and traditions; roles are inherited across generations.
- Command Economy: The government exerts control over economic activities and decisions.
- Market Economy: Individuals and the open market dictate economic choices, promoting competition.
Economic Concepts
- Specialization: Focus on a narrow range of goods and services, enhancing efficiency and production.
- Opportunity Cost: Represents the value of the next best alternative when a decision is made; essential for assessing trade-offs in resource allocation.
Trade Agreements and Policies
- NAFTA: North American Free Trade Agreement aimed at reducing trade barriers between the US, Canada, and Mexico.
- Tariff: A tax imposed by the government on imported or exported goods, influencing trade dynamics.
- Quota: A regulatory limit on the amount of a product that can be imported into a country.
- Embargo: A prohibition on trade or movement of goods, often used as a political tool to restrict trade with specific nations.
Economic Terms and Measures
- Domestic: Related to home affairs or the internal dynamics of a country.
- Exchange Rate: Indicates the value of one currency in relation to another, affecting international trade and investment decisions.
- Human Capital: The collective skills, knowledge, and experience possessed by an individual, crucial for workforce productivity.
- Capital Goods: Tangible assets (like machinery and buildings) utilized for production, contributing to long-term economic output.
- GDP (Gross Domestic Product): A key indicator measuring the total economic output of a country, reflecting its economic health.
- Entrepreneur: An individual who initiates and manages a business venture, assuming associated risks while driving innovation and economic growth.
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