Chapter 2

Question 1

Economics

Answer 1

The study of the choices that people, companies, and governments make in allocating society’s resources.

Question 2

Macroeconomics

Answer 2

The study of a country’s overall economic dynamics, such as the employment rate, the gross domestic product, and taxation policies.

Question 3

Microeconomics

Answer 3

The study of smaller economic units such as individual consumers, families, and individual businesses.

Question 4

Economic system

Answer 4

A structure for allocating limited resources.

Question 5

Capitalism

Answer 5

An economic system - also known as the private enterprise or free market system - based on private ownership, economic freedom, and fair competition.

Question 6

Supply

Answer 6

The quantity of products that producers are willing to offer for sale at different market prices.

Question 7

Demand

Answer 7

The quantity of products that consumers are willing to buy at different market prices.

Question 8

Socialism

Answer 8

An economic system based on the principle that the government should own and operate key enterprise that directly affect public welfare.

Question 9

Communism

Answer 9

An economic and political system that calls for public ownership of virtually all enterprises l, under the direction of a strong central government.

Question 10

Mixed economics

Answer 10

Economies that embody elements of both planned and market-based economic systems.

Question 11

Consumer Price Index (CPI)

Answer 11

A measure of inflation that evaluates the change in the weighted - average price of goods and services that the average consumer buys each month.

Question 12

Producer Price Index (PPI)

Answer 12

A measure of inflation that evaluates the change over time in the weighted - average wholesale prices.

Question 13

economy

Answer 13

A financial and social system of how resources flow through society, from production, to distribution, to consumption.