Chapter 1

Question 1

Circular flow chart

Answer 1

A diagram that views the economy as consisting of households and firms interacting with goods and service markets and labor markets

Question 2

Command economy

Answer 2

An economy where economic decisions are passed down from government authority and where the government owns resources

Question 3

Division of labor

Answer 3

The way in which different workers divide required tasks produce a good/service

Question 4

Economics

Answer 4

Study of how humans make decisions under conditions of scarcity

Question 5

Economies of scale

Answer 5

Average cost of producing each individual unit decreases as total output increases(producing more costs less)

Question 6

Exports

Answer 6

Products(goods/services) made domestically sold abroad

Question 7

Fiscal policy

Answer 7

Economic policies that involve government spending and taxes

Question 8

Globalization

Answer 8

Trend in which buying and selling in markets has increasingly cross national borders

Question 9

Goods and services markets

Answer 9

A market where firms are sellers of what they produce and households are buyers

Question 10

GDP Gross Domestic Product

Answer 10

Measure of the size of total production and economy

Question 11

Imports

Answer 11

Products(goods/services) made abroad sold domestically

Question 12

Labor market

Answer 12

The market in which households sell their labor as workers to business ,firms, or other employers

Question 13

Macroeconomies

Answer 13

The branch of economics that focuses on broad issues such as growth , unemployment , inflation, and trade balance

Question 14

Market

Answer 14

Interaction between potential buyers and sellers; a combination of demand and supply

Question 15

Market economy

Answer 15

An economy where economic decisions are decentralized. Private individual’s own resources ,and businesses supply goods and services based on demands

Question 16

Microeconomics

Answer 16

Branch of economics that focuses on actions of particular agents within the economy(Business firms, workers ,households)

Question 17

Model/theory

Answer 17

Representation of an object or situation that is simplified while including enough key features to help us understand the object or situation

Question 18

Monetary policy

Answer 18

Policy that involves altering the level of interest rates , the availability of credit in the economy, and the extent of borrowing

Question 19

Private enterprise

Answer 19

System where private individuals or groups are private individuals own and operate means of production(resources and businesses)

Question 20

Scarcity

Answer 20

When human wants for goods/services exceed available supply

Question 21

Traditional economy

Answer 21

Typically an agricultural economy where things are done the way they have always been done

Question 22

Underground economy

Answer 22

A market where buyers and sellers make transactions in violation of one or more government regulations

Question 23

Specialization

Answer 23

When workers or firms focus on a particular task for which they are well suited within the overall production process