Checklist Flashcards
(22 cards)
What is the concept of scarcity?
Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.
What does opportunity cost refer to?
Opportunity cost refers to the value of the next best alternative that is forgone when making a choice.
What is the difference between needs and wants?
Needs are essential for survival, while wants are desires for non-essential items.
Name the three basic economic questions that economic systems must answer.
- What to produce?
- How to produce?
- For whom to produce?
Compare market, mixed, and command economies.
Market economies rely on supply and demand, mixed economies combine elements of market and command systems, and command economies are centrally planned by the government.
What role does the government play in various economic systems?
The government regulates, provides public goods, and can intervene in the economy to achieve social goals.
What does the Production Possibility Curve (PPC) illustrate?
The PPC illustrates the maximum possible output combinations of two goods that an economy can achieve given its resources.
What does efficiency mean in the context of the PPC?
Efficiency refers to points on the PPC where resources are fully utilized.
What are underutilization and unattainable points in the PPC?
Underutilization refers to points inside the PPC where resources are not fully used, and unattainable points are outside the PPC.
What is oppurtunity cost in economics?
Oppurtunity cost are the alternatives that must be given up when making a choice.
How does economic growth affect the PPC?
Economic growth shifts the PPC outward, indicating an increase in an economy’s capacity to produce.
What is the basic circular flow model?
The basic circular flow model illustrates the flow of goods, services, and money between households and firms.
Extend the basic circular flow model to include which sectors?
- Government
- Financial
- Overseas
What are injections and leakages in the circular flow model?
Injections add money to the economy (e.g., investments, government spending, exports), while leakages remove money (e.g., savings, taxes, imports).
What is the role of households in the economy?
Households provide factors of production and consume goods and services.
What is the role of businesses in the economy?
Businesses produce goods and services and pay wages to households.
Define Gross Domestic Product (GDP).
GDP is the total monetary value of all finished goods and services produced within a country’s borders in a specific time period.
What is the difference between nominal and real GDP?
Nominal GDP measures the value of goods and services at current prices, while real GDP adjusts for inflation.
Name other key economic indicators.
Unemployment rate
* Inflation
* GDP
What are the stages of the trade cycle?
- Boom
- Downturn
- Trough
- Recovery
True or False: Economic activity remains constant over time.
False
What factors influence the business cycle?
- Consumer spending
- Investment
- Government policies
