H - 201 Exam 1

Question 1

Financial Capital is…

Answer 1

Money that can be used to purchase goods capital

Question 2

Rivalry among individuals from sales to consumers; the natural regulator that makes the free market system work

Answer 2

Competition

Question 3

Define: Assumption

Answer 3

Supposing something is true without proof

Question 4

Term: Increase in an economy total output of goods and services

Answer 4

Economic Growth

Question 5

Process of limiting the scope of an economic unit’s productive efforts instead of trying to produce everything it needs

Answer 5

Specialization

Question 6

Define: Microeconomics

Answer 6

Deals with the economic problems of the individual, firm, and industry

Question 7

Define: Capital Goods

Answer 7

Economic goods used to produce other consumer/capital goods

Question 8

Define: Laissez faire

Answer 8

Policy of No Government intervention in economic activities and businesses

Question 9

Define: Opportunity Cost

Answer 9

Value of the next-best alternative that must be sacrificed when a choice is made

Question 10

The 4 main resources of a nation

Answer 10

Land, Labor, Capital, Enterprise

Question 11

Position of stability/rest where quantity supplied = quantity demanded

Answer 11

Equilibrium

Question 12

Define: Paradox of Thrift

Answer 12

Saving by individual/families is desirable for increasing capital formation
BUT
undesirable for national income resulting in increased unemployment

Question 13

Define: Consumer Goods

Answer 13

Economic goods that are directly utilized by consuming public goods

Question 14

What is the “Functional Distribution of Income?”

Hint: Is used in a market economy, payment for use of the productive resources

Answer 14

A pattern answering the question about

What share of PAYMENT each route recipe e for its contribution to the total production.

Question 15

Define: Labor

Answer 15

Time and effort expended by human being involved in the production process

Question 16

Define: Utility

Answer 16

The ability of a good/service to satisfy a want

Question 17

Define: Total Product

Answer 17

The sum of all the goods/services produced by an economy over a given period

Question 18

Define: Economic Good

Answer 18

Object/service that has utility, is scarce, and transferable

Question 19

Strict government regulation of production, distribution, and advocates ways to promote equality and economic development. Is authoritarian.

What are the country examples?

(1 of 3 vrsn. Command Economies)

Answer 19

Socialism

- Denmark, Sweden, Soviet, E. Europe

Question 20

An authoritarian state imposed on a capitalist system.
System that combines monopoly, capitalism, private property, and strong dictatorial central government.

What are the country examples?

(1 of 3 vrsn. Command Economies)

Answer 20

Fascism

Portugal, Spain, Italy, Germany

Question 21

Government ownership of land, capital, and government regulation of distribution. -Private property is non-existent

What are the country examples?

(1 of 3 vrsn. Command Economies)

Answer 21

Communism

Cuba, Venezuela

Question 22

3 Roles of Prices on Market Economy

Answer 22

Deciding Income
Rationing Consumer Demand
Allocating Resources

Question 23

Normative Economics

Answer 23

Economics dealing with “what OUGHT to be.”

Question 24

Entrepreneur

Answer 24

Person who organizes and assumes the risk of a business venture

Question 25

6 characteristics of Economic Liberalism

Answer 25

Freedom of Action for the Individual 
Doctrines of Free-Trade
Self-Interest
Private Property 
Laissez-Faire
Competition

Question 26

Frequently a market for goods and services may be more orderly and serve the consuming public better better if the firms involved are regulated to some degree by government agency.
-Public utilities traditionally fall under this form of control.

Answer 26

Regulation