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Econ 201 Ch 1, 2, 20
Macro-economics
| Question | Answer |
|---|---|
| Quiz 1 Slope | y2-y1 ----- x2-x1 |
| Quiz 1 Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the | forgone working or partying, depending on which was your next best choice. |
| Quiz 1 To show how a variable ________, we typically use a ________. | changes over time; time series graph |
| Quiz 1 People must make choices because | of scarcity. |
| Quiz 1 The additional benefit of increasing some activity by one-unit is called the | marginal benefit. |
| Quiz 2 As a factor of production, oil reserves are counted as | land. |
| Quiz 2 Most of the world's population lives in | developing economies. |
| Quiz 2 The Colorado Ski Shop sold 60 ski jackets to a Belgium company's headquarters located in Paris, France. The ski jackets are a | U.S. export |
| Quiz 2 In the circular flow model, which of the following flows in the opposite direction from the flow of factors of production? | wages, rent, interest, and profit |
| Quiz 2 Within the U.S. economy, the role of the government | includes providing some goods and services. |
| Quiz 3 Real GDP measures the value of goods and services produced in a given year valued using | base year prices. |
| Quiz 3 GDP is equal to the ________ value of all the final goods and services produced within a country in a given period of time. | market |
| Quiz 3 Consumption expenditure is | the value of household expenditure on services, durable and non-durable goods. |
| Quiz 3 A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is | an intermediate good. |
| Quiz 3 If you buy a five-year old TV from a friend, the amount you paid for the TV is | not included in this year's GDP. |
| Ch.1 All economic questions and problems arise because | human wants exceed the resources available to satisfy them. |
| Ch.1 Scarcity | The condition that arises because the available resources are insufficient to satisfy wants. |
| Ch.1 Choice | Faced with scarcity, we must make choices—we must choose among the available alternatives. The choices we make depend on the incentives we face. |
| Ch.1 Incentive | An incentive is a reward or a penalty—a “carrot” or a “stick”—that encourages or discourages an action. |
| Ch.1 Economics | The social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices. |
| Ch.1 Goods and services | Objects (goods) and actions (services) that people value and produce to satisfy human wants. |
| Ch.1 Goods and Services What, How, and Whom 1 | We must decide what, how, and for whom goods and services get produced. |
| Ch.1 Goods and Services What, How, and Whom 2 | -With limited resources, we must produce what we want. -With limited resources, we must produce in the best possible way. -With limited goods and services produced, we must decide who gets what. |
| Ch.1 Choices are made by | each individual. |
| Ch.1 Self-interest | Choices that are best for the individual who makes them. |
| Ch.1 Social interest | Choices that are best for society as a whole. Best choice for the individual may or may not be the best choice for society as a whole. Ex. Unemployment |
| Ch.1 Five Core Economic Ideas | Five core ideas summarize the economic approach or economic way of thinking about the choices: -Cost -Benefit -Margin -Rational choice -Incentives |
| Quiz 4 The calculation of GDP excludes | a family member painting the family home. |
| Quiz 4 People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called | discouraged workers. |
| Quiz 4 Which of the following is true? | Real GDP fluctuates around potential GDP. |
| Quiz 4 The business cycle is defined as | irregular ups and downs in production and jobs. |
| Ch.1 Cost:____________ Opportunity cost | What You Must Give Up The highest-valued alternative forgone. |
| Ch.1 Benefit:_______________ Benefit | Gain Measured by What You Are Willing to Give Up The gain or pleasure that something brings. |
| Ch.1 Margin | A choice that is made by comparing all the relevant alternatives systematically and incrementally. |
| Ch.1 Marginal Cost | The cost of a one-unit increase in an activity. |
| CH.1 Marginal Benefit | What you gain when you get one more unit of something. |
| Ch.1 Rational choice Making a Rational Choice | -A choice that uses the available resources to best achieve the objective of the person making the choice. -When we take those actions for which marginal benefit exceeds or equals marginal cost. |
| Ch.1 Responding to Incentives | -In making our choices, we respond to incentives. -If the cost of something rises, we try to find a less costly alternative. |
| Ch.1 Responding to Incentives (continuation) | -If the benefit of something rises, we do more of that thing. -The government can alter marginal cost and marginal benefit of choices and can affect the choices that people make. |
| Ch.1 Goal of economic science | -To discover how the economic world works. -To correct undesirable outcomes in the economic world |
| Ch.1 Four Steps of Economic Science | 1. Describing an economic event. 2. Explaining why the event occurs. 3. Predicting under what circumstance such event might take place. 4. Recommending appropriate courses of action. |
| Ch.1 Abstraction | -Ignoring many details so as to focus on the most important elements of a problem. -Because of the great complexity of human behavior, economists are forced to abstract from many details. |
| Ch.1 Ceteris paribus: | Other things being equal. |
| Ch.1 Economic model | A description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand. |
| Ch.1 Economic models in four ways: | -Numerical table -Graph -Algebra -Verbal |
| Ch.1 Testing | A model’s predictions might correspond to or conflict with the data. |
| Ch.1 Economic theory | A generalization that summarizes what we understand about the economic choices that people make and the economic performance of industries and nations. |
| Ch.1 Positive economics (statements): | What is economic analysis that explains what happens in the economy and why. |
| Ch.1 Normative economics (statements): | What ought to be economic analysis that makes recommendations about economic policy. |
| Ch.1 Microeconomics: | The study of the choices that individuals and businesses make, the way these choices interact, and the influence that governments exert on these choices. |
| Ch.1 Macroeconomics: | The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make. |
| Ch.1 Three major issues in macroeconomics | -Standard of living -Cost of living -Economic fluctuations |
| Ch.1 Economic growth | Upward trend of the standard of living, being able to produce and consume more and more goods and services. |
| Ch.1 Inflation (Deflation) | A situation in which the cost of living is rising (falling) and the value of money is shrinking (increasing). |
| Ch.1 Business cycle | A periodic but irregular up-and-down movement of total production and other measure of economic activity. |
| Ch.1 Slope | Y2-Y1 ----- X2-X1 |
| Ch.1 Cross-section graph | A graph that shows the values of an economic variable for different groups in a population at a point in time. |
| Ch.1 Scatter diagram | A graph of the value of one variable against the value of another variable. |
| Ch.1 Time-series graph -Trend | A graph that measures time on the x-axis and the variable or variables in which we are interested on the y-axis. -A general tendency for the value of a variable to rise or fall. |
| Ch.1 Positive relationship or direct relationship | A relationship between two variables that move in the same direction. |
| Ch.1 Negative relationship or inverse relationship | A relationship between two variables that move in opposite directions. |
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