study guide for test #1

Question 1

economics

Answer 1

the study of choice under conditions of scarcity/the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses

Question 2

scarcity

Answer 2

exists when we desire more than we have/little quantity of an object

Question 2

trade off

Answer 2

give up one thing to get something else

Question 2

need

Answer 2

bare minimum requirements to sustain life (water,air,home,etc.)

Question 2

opportunity cost

Answer 2

the cost of getting one thing and not another

Question 3

want

Answer 3

things that are desired but unnecessary

Question 3

goods

Answer 3

physical items that are produced/manufactured to be sold (toothbrush, hairbrush, etc.)

Question 4

services

Answer 4

activities produced in an economy (education,medicine)

Question 5

resources

Answer 5

the basic elements from which all goods and services are produced

Question 6

land

Answer 6

anything drawn from nature for the use of production of goods or services (trees)

Question 7

labor

Answer 7

time and effort people contribute to the production process

Question 8

capital

Answer 8

anything long lasting that is created by humans to be used in production (saw, hammers, nails, etc.)

Question 9

entrepreneurship

Answer 9

people who take risks and create products/companies

Question 10

communist

Answer 10

economy controlled by gov

Question 10

Capitalist (free market)

Answer 10

little gov involvement in economy

Question 11

socialist

Answer 11

Private + gov owned businesses

Question 12

fascism

Answer 12

basically rallying people against/for a goal (think hitler and germany) , but fascist governments tend to have capitalist economies

Question 13

money

Answer 13

anything that is widely accepted in exchange for goods and services, it is a medium of exchange, a store of value, and a unit of account

Question 14

barter

Answer 14

the exchange of goods or services for other goods or services without the use of money, it limits choices

Question 15

currency

Answer 15

paper money and coins

Question 16

demand deposits

Answer 16

money held in checking accounts in the bank

Question 16

medium of exchange

Answer 16

something people acquire for the purpose of payment for goods and services

Question 16

production possibility frontier model

Answer 16

a curve that shows the max quantity of one good that can be produced for each possible quantity of another good produced

Question 17

guns v butter

Answer 17

guns- anything with war
butter- anything other than war

Question 18

law of increasing opportunity cost

Answer 18

once more of a good is produced, its opportunity cost will rise, economies must make trade offs and some resources are best suited for one type of production (ex- florida oranges)

Question 19

microeconomics

Answer 19

the study of how companies make decisions and how those decisions affect the economy ( with that… profits, markets, and pollution )

Question 20

macroeconomics

Answer 20

the study of the economy as a whole from a national perspective ( with that… inflation, interest rates, and government spending )

Question 21

positive economics

Answer 21

study of what the world is like and why it works the way it does, (questions include: how many teenagers live in poverty?

Question 22

normative economics

Answer 22

study of what the way things should be and bring in opinions and ideas (questions include: should our country do more to help the poor? Should our country cancel student loans?)

Question 23

standard of living

Answer 23

measure of comfort in terms of goods and services available (choices not quality of living)

Question 24

product market

Answer 24

anywhere something is sold/ anywhere you can buy goods

Question 25

resource market

Answer 25

households hold resources that transfers businesses

Question 26

4 factors of production

Answer 26

land, labor, capital, entrepreneurship

Question 27

firm

Answer 27

business or company that makes goods

Question 28

to an economist, the cost of something is....

Answer 28

the total of all you gave up to get it

Question 29

The basic elements from which all goods and services are produced are known as:

Answer 29

resources

Question 30

Anything long-lasting that is created by humans for use in production describes the scarce resource:

Answer 30

capital

Question 31

As a generally accepted form of payment for virtually anything buyers seek, money serves as a:

Answer 31

medium of exchange

Question 32

Which of the following is an asset that is considered part of the M1 definition of money?

Answer 32

checking/savings account

Question 33

Money that has value apart from its use as money is called:

Answer 33

commodity money

Question 34

Money that has no value of its own, but can be exchanged for something of value (often gold or silver) is called:

Answer 34

representative money

Question 35

When you put money in your savings account to save up for college, money is serving as:

Answer 35

a store of value

Question 36

When a person makes price comparisons among products, money is being used as a:

Answer 36

unit of account

Question 37

Which type of money is used in the United States today?

Answer 37

fiat money

Question 38

Which of the following assets is contained in M2 but not in M1?

Answer 38

Long term bank savings accounts (CDs, certificates of deposit)...these are not regular savings accounts

Question 39

Fiat money has value because:

Answer 39

the gov says it does

Question 40

Which of the following is an example of an economic model?

Answer 40

curve showing maximum quantities of goods produced

Question 41

What factor would show that an economy is inefficient?

Answer 41

There are unemployed resources.

Question 42

The tendency for the opportunity cost of a good to rise as more of the good is produced is called:

Answer 42

the law of increasing opportunity cost

Question 43

Adam Smith believed that economic decisions should be made by:

Answer 43

buyers + sellers

Question 44

Which statement best explains the underlying cause of the law of increasing opportunity cost?

Answer 44

Economies must make trade-offs as they decide which goods to produce + Some resources are better suited for one type of production than another.

Question 45

an increase in the amount of goods and services an economy can produce over time.

Answer 45

economic growth

Question 46

A manufacturer who decides to use more labor and fewer machines to produce a given level of output is dealing with the economic question of:

Answer 46

how to produce

Question 47

When a corn processing plant decides to produce more ethanol and less feed corn it is dealing with the economic question of:

Answer 47

what to produce

Question 48

Which of the following would be a question about a country’s standard of living?

Answer 48

Do people enjoy plenty of goods and services, including things such as secure homes and reliable cars that make life more enjoyable?

Question 49

Which of the following would be a question about economic growth?

Answer 49

Is the economy experiencing an increase or a decrease in the amount of goods and services it can produce over time?

Question 50

Achieving economic growth and in the process using up resources faster than they become available puts the goal of economic growth in conflict with the goal of:

Answer 50

sustainability

Question 51

people can make economic decisions for themselves.

Answer 51

economic freedom

Question 52

In recent years, e-book readers have experienced great economic growth. What is one likely tradeoff of meeting this economic goal?

Answer 52

Owners of traditional bookstores experience less economic security.

Question 53

the quality of being just and fair.

Answer 53

equity

Question 54

an organizational structure for addressing, what, how and for whom to produce.

Answer 54

economic system

Question 55

What economic system was the philosopher Karl Marx most influential in shaping?

Answer 55

communism

Question 56

Which statement best summarizes an idea of the economist Friedrich von Hayek?

Answer 56

Local business owners understand their own markets best.

Question 57

What is the primary incentive for business owners in a market economy?

Answer 57

earning PROFIT

Question 58

In countries where social safety nets are very low we would expect to find:

Answer 58

people saving more of their income

Question 59

Households that lend firms money to buy capital receive:

Answer 59

interest

Question 60

Which of the following is an example of a public good?

Answer 60

removing snow roads

Question 61

Which of the following transactions would take place in the factor market?

Answer 61

firms buying labor from households

Question 62

Expenditures for which the government receives no good, service, or resource in return is:

Answer 62

transfer payment

Question 63

Which of the following is true about the circular-flow diagram?

Answer 63

The circular-flow diagram illustrates the economic relationship between households and businesses.

Question 64

Which statement best explains why must government provide some public goods?

Answer 64

Market economies offer little incentive for producer to make certain shared goods and services.

Question 65

Which of the following transactions would take place in the product market?

Answer 65

firms selling goods to households

Question 66

Which of the following is most closely associated with larger social safety nets?

Answer 66

higher taxes

Question 67

One half of a circular flow diagram shows the exchange of goods and services for money that takes place in:

Answer 67

product markets

Question 68

Resources are exchanged for money in:

Answer 68

factor markets