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Questions and Answers
What is economics?
What is economics?
Economics is the study of the production, distribution, and consumption of goods and services.
What role do households play in the economy?
What role do households play in the economy?
Households provide businesses with labor, land and buildings, and capital, and in return receive income.
Which of the following are factors of production? (Select all that apply)
Which of the following are factors of production? (Select all that apply)
Entrepreneurship is one of the resources used to produce goods and services.
Entrepreneurship is one of the resources used to produce goods and services.
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The ______ used to produce outputs can include land, labor, and capital.
The ______ used to produce outputs can include land, labor, and capital.
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What is gross domestic product (GDP)?
What is gross domestic product (GDP)?
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What is the difference between fiscal and monetary policy?
What is the difference between fiscal and monetary policy?
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What are the concepts related to economics mentioned? (Select all that apply)
What are the concepts related to economics mentioned? (Select all that apply)
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What is measured by the unemployment rate?
What is measured by the unemployment rate?
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Study Notes
Economics Defined
- Economics studies how goods and services are produced, distributed, and consumed.
- Resources are the inputs used to create these goods and services.
Resources
- Resources are the factors of production used in creating goods and services
- Resources can be:
- Land and natural resources
- Labor - physical and mental
- Capital - buildings, equipment, cash
- Entrepreneurship - skills and creativity to combine resources
- Knowledge
Input and Output Markets
- Businesses acquire the necessary factors of production (inputs) from households.
- Households provide:
- Labor (workers)
- Land and buildings (landlords)
- Capital (investors)
- Businesses provide income to households in return:
- Wages
- Rent
- Interest
- Businesses use the factors of production to create goods and services (outputs), which they sell to households for revenue.
- This revenue is then used to purchase more resources from households and continue the cycle.
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