A. Basic Economic Concepts and Principles

Question 1

Define money (characteristics, role, and forms) and trace how money and
resources flow through the American economic system.

Question 2

Utilize decision-making models to make economic choices and determine the
opportunity cost of those choices.

Answer 2

use of anaylsis such as cost-benefit and marginal analysis to weigh the possible losses of, well, opportunities from choosing that alternative eoption

Question 3

Describe how trade-offs are made during the decision -making process.

Answer 3

time, money, labour, or other finite resources being given off in exchange for a (hopefully) more important gain in the short or long term (ex. gov. spending money on healthcare vs. education)

Question 4

demand deposit

Answer 4

type of accoutn where funds can be withdrawn at any time w.o prior notice (checks, debit card, electronic transfer)

usually lower interest but high liquidity (ease of conversion of asset int ready cash w/o affecting market price)

Question 5

difference between portability, divisibility, and uniformity

Question 6

unit of account

Answer 6

a commonly-held measure of the value of something (ex. watermelons cost this much money)

Question 7

store of value

Answer 7

something that holds purchasing power over time (ex. money that does not depreciate, such as gold)

Question 8

cost-benefit vs. marginal analysis (big vs. small scales)

Answer 8

cost benefit: do the benefits of a decision outweigh cost?
marginal: how do the benefits and costs change given a SMALL CHANGE IN ACTIVITY?

Question 9

market economy vs. command economy

Answer 9

free market vs. government controlled market basically (cgov. does/does not own and control means of production)

Question 10

production, distribution, and consumption

Question 11

inflation and deflation

Question 12

define curve concepts, “standard” concepts, and aggregate concepts (ex. supply vs. aggregate supply vs. aggregate supply curve vs. supply curve)

Answer 12

curves = graphical representation

standard supply/demand = individual good/service

aggregate = overall economic supply/service

Question 13

true/false: businesses offer limited liability protection to owners and are not separate legal entities

Answer 13

FALSE, they ARE separate legal entities

Question 14

proprietorship vs. partnership vs. corporation

Answer 14

1. single person owns and operates, unlimited liability (they assume all debts and obligations)
2. 2+ owners, either general partnership w/partners all having unlimited liability, or limited partnership w/ a few owners having limited liability
3. separate legal entity from owners (shareholders), all having limited liability and thus no debt/obligations past their shares
   - corporations have legal formalities like meetings and filings

Question 15

liquidity

Answer 15

the measure of ease of an asset’s ability to be convered into cash

Question 16

what can a government do to stimulate eocnomic growth?

Answer 16

tax cuts, rebates (partial tax refund), (boosting spending)

deregulation

infrastructure (businesses operate more effectively, construction jobs)

Question 17

scarcity (GO INTO MORE DEPTH aBOUT THIS)

Answer 17

limited resources vs. unlimited wants/needs

Question 18

law of diminishing returns

Answer 18

proportionally smaller profits as more money is invested in

Question 19

law of diminishing utility

Answer 19

utility of smth goes down as you buy more of it