INTRO TO ECONOMICS

Question 1

The economy

Answer 1

All the production and exchange activities that take place everyday.

Question 2

Economic activity

Answer 2

The buying and selling that goes on in an economy over a period of time.

Question 3

Economic system

Answer 3

The way in which resources are organized and allocated in order to provide for the needs of the economy’s citizens.

Question 4

Planned economic system

Answer 4

An economic system in which economic decisions are made by a central authority rather than by market participants.

Question 5

Pure market/capitalist system

Answer 5

A free, private economic system that allows voluntary and competing private individuals to plan, produce, and trade without government interference.

Question 6

A mixed market economy

Answer 6

A mixed economy is an economic system wherein free markets and government involvement are able to coexist when it comes to resource distribution, commerce, and trade.

Question 7

Scarcity

Answer 7

Society has limited resources and therefore cannot produce all the goods and services people wish to have.

Question 8

Economics (in relation to scarcity)

Answer 8

• study of how society manages its scarce resources
• study of people ‘in the ordinary business of life’

Question 9

Microeconomics

Answer 9

Study of how households and firms make decisions and how they interact in markets.

Question 10

Macroeconomics

Answer 10

Study of economy-wide phenomena, including inflation, unemployment and economic growth.