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Question 1

The production of goods and services under______ is based on supply and demand in the general market—known as a MARKET ECONOMY—rather than through central planning—known as a planned economy or COMMAND ECONOMY.

Answer 1

Capitalism

Question 2

It is central planning—known as a planned economy or _____

Answer 2

Command Economy

Question 3

The Forefather of capitalist thinking

Answer 3

Adam Smith

Question 4

The production of goods and services under capitalism is based on supply and demand in the general market—known as a

Answer 4

Market economy

Question 5

Prices allocate Capital and Labor between competing uses

Answer 5

Capitalist Economy

Question 6

Government intervention can stabilize the economy.

Answer 6

Assumption of Keynesian Economics

Question 7

His assumption was that humans were self-serving by nature but that as long as every individual were to seek the fulfillment of her/his own self-interest, the material needs of the whole society would be met.

Answer 7

Adam Smith

Question 8

In a capitalist economy. the market operates under the ______.

Answer 8

Laws of supply and Demand

Question 9

Example of Capitalist countries

Answer 9

• Hong Kong
• Singapore
• New Zealand
• Switzerland
• Australia

Question 10

Ownership lies in the hands of individuals.

Answer 10

Capitalist Economy

Question 11

What is the purest form of capitalism?

Answer 11

Free market or laissez faire

Question 12

Is an economic system in which private individuals or businesses own capital goods.

Answer 12

Capitalism

Question 13

It was marked by steeped declines in industrial production and in prices (deflation), mass unemployment and sharp rates of poverty and homelessness. It was the longest and most severe economic downturn in modern history.

Answer 13

The Great Depression

Question 14

Competition between individuals who own the factors of production keep prices reasonable, production cost-effective, and quality high.

Answer 14

Capitalist economy

Question 15

He wrote “The General Theory of Employment, Interest and Money (1935-1936)”

Answer 15

John Maynard Keynes

Question 16

Father of modern Capitalism

Answer 16

Adam Smith

Question 17

It was the longest and most severe economic downturn in modern history.

Answer 17

The Great Depression

Question 18

He wrote “A Tract on Monetary Reform (1923)”

Answer 18

John Maynard Keynes

Question 19

The more people spend, the larger the multiplier effect.

Answer 19

Assumption of Keynesian Economics

Question 20

Profit is made by producing goods and services at the lowest possible cost while selling them at the highest possible price.

Answer 20

Capitalist Economy

Question 21

Is a simplified version of reality that allows us to observe, understand, and make predictions about economic behavior

Answer 21

Economic Model

Question 22

It is the amount a producer is willing to supply in the market while

Answer 22

Supply

Question 23

Is the social science that studies the implications of incentives and decisions, specifically about how those affect the utilization and distribution of resources.

Answer 23

Microeconomics

Question 24

They provide qualitative answers to specific questions—such as the implications of asymmetric information or how best to handle market failures.

Answer 24

Theoretical Models

Question 25

Stock market crash resulting in reductions of spending and investing

Answer 25

The Great Depression

Question 26

Deals with prices and production in single markets and the interaction between different markets but leaves the study of economy-wide aggregates to macroeconomics.

Answer 26

Microeconomics

Question 27

Concept of Microeconomics

Answer 27

1. Incentives & Behavior
2. Utility Theory
3. Production Theory
4. Price Theory

Question 28

It is the desire of consumers to purchase a product.

Answer 28

Demand

Question 29

It studies the decisions of individuals and firms to allocate resources of production, exchange, and consumption.

Answer 29

Microeconomics

Question 30

Limits of Macroeconomics

Answer 30

*Fallacy composition
*To regard the aggregates as homogenous
*Aggregate variables may not be important necessarily
*Indiscriminate use of macroeconomics
*Statistical and Conceptual Difficulties

Question 31

Macroeconomics School of Thought

Answer 31

• Classical
• Keynesian
• Monetarist
• New Classical
• New Keynesian
• Austrian

Question 32

a branch of economics that studies how an overall economy—the markets, businesses, consumers, and governments—behave

Answer 32

Macroeconomics

Question 33

It generally consists of a set of mathematical that describe the theory of economic behavior.

Answer 33

Economic Model

Question 34

Government Spending leads to more spending.

Answer 34

Assumption of Keynesian Economics

Question 35

Is a diagram indicating that the economy consists of households and firms interacting in a goods-and-services market and a labor market

Answer 35

Circular flow diagram

Question 36

*Seek to derive verifiable implications about economic behavior under the assumption that agents maximize specific objectives subject to constraints that are well defined in the model.
*For example, an agent’s budget.

Answer 36

Theoretical Models

Question 37

Aim to verify the qualitative predictions of theoretical models and convert these predictions to precise, numerical outcomes.

Answer 37

Empirical Models

Question 38

The_______ marketplace operates without checks or controls.

Answer 38

Laissez-faire

Question 39

Focuses on the supply that determines the price level of the economy.

Answer 39

Microeconomics

Question 40

It examines economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.

Answer 40

Macroeconomics