Macro Quiz 1 Flashcards
In the circular flow illustration what should go on the bottom of the arrow pointing from factors market to business?
Factors of production
Instead of using sunk cost fallacy what decision making method should you use?
Economic decision rule
In the circular flow illustration what should go on top of the arrow pointing from goods market to households?
Goods and services
Comparative Advantage
Someone who is better suited to do the production of one good than to the production of the other good
How does a market economy answer the 3 key economic questions?
The market answers these questions
What decision method should you not use in economics?
Sunk Cost Fallacy
Absolute Advantage
Who can make more with the same amount of resources
For government where should you have arrows pointing?
Have 2 sided arrows(➡️⬅️) to and from households and business
If supply and demand shift in the same direction what will be unknown?
Price
When does supply and demand shift?
When there are two effects or if you see “and”
When is there no shift on the supply and demand graph?
If only price changes
Sunk Cost
Are costs that you already had to pay and cannot be recovered
How does a traditional economy answer the 3 key economic questions?
Tradition answers all three key economic questions
What goes at the top of the circular flow diagram illustration
Goods Market
At the end of the drawing of the circular flow diagram what should you do?
Have arrows going in both directions connecting the four sectors of the economy together
In the circular flow illustration what should go on the bottom of the arrow pointing from government to households?
Services
What are the 3 key economic questions?
What to produce?
How to produce it?
Who gets what?
What are the five things included in a circular flow diagram illustration?
Government Goods Market Business Factors Market Households
What goes on the right in the circular flow diagram illustration
Business
If supply and demand shift in opposite directions what will be unknown?
Quantity
In the circular flow illustration what should go on the bottom of the arrow pointing from government to business?
Services
In the circular flow illustration what should go on top of the arrow pointing from government to households?
Tax
What goes on the bottom in the circular flow diagram illustration
Factors market
When does a shift in supply happen?
Something that affects how much people want to produce
