Chapter 2

Question 1

Economy

Answer 1

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

Question 2

Economics

Answer 2

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

Question 3

Macroeconomics

Answer 3

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

Question 4

Microeconomics

Answer 4

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

Question 5

Gross domestic product

Answer 5

(GDP) The total value of all final goods and services produced within a nation’s physical boundaries over a given period of time.

Question 6

Economic System

Answer 6

A structure for allocating limited resources.

Question 7

Capitalism

Answer 7

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

Question 8

Supply

Answer 8

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

Question 9

Supply Curve

Answer 9

The graphed relationship between price and quantity from a supplier standpoint.

Question 10

Demand

Answer 10

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

Question 11

Demand Curve

Answer 11

The graphed relationship between price and quantity from a customer demand standpoint.

Question 12

Socialism

Answer 12

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

Question 13

Communism

Answer 13

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

Question 14

Mixed Economies

Answer 14

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