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UNIT 2 TEST 2018

Mr. Stickler's Liberty Christian ECON Unit 2 Test Flashcards 2018

QuestionAnswer
List one (1) characteristic of a Traditional Economy. The decision about how to use resources is based on habit or custom. (Pg. 34)
What is one (1) disadvantage of Traditional Economies? New ideas are discouraged (i.e. there is very little innovation). (Pg. 35)
What is one (1) advantage of Traditional Economies? Everyone knows which role to play in the economy. (Pg. 34)
List one (1) characteristic of a Command Economy. A central authority, such as the government, makes the WHAT, WHO, & FOR WHOM decisions. (Pg. 35)
What is one (1) disadvantage of Command Economies? They ignore the basic wants and needs of consumers. (Pg. 37)
What is one (1) advantage of Command Economies? The economy can change drastically if necessary. (Pg. 36)
List one (1) characteristic of a Market Economy. Resources can be privately owned (i.e. private citizens can own the Factors of Production). (Pgs. 37 & 38)
What is one (1) disadvantage of Market Economies? Market Economies do not always provide for everyone. (Example: a person may be too young or too old to earn a living or to care for themselves.) Pg. 39
What are three (3) advantages of Market Economies? 1.) High degree of individual freedom; 2.) It adjusts gradually to change over time; 3.) There is a relatively small degree of government interference in this type of economy. (Pg. 39)
List one (1) characteristic of a Mixed Economy. 1.) government & tradition answer some of the questions of WHAT, HOW, and FOR WHOM. (Pgs. 39 & 40)
List one (1) disadvantage of a Mixed Economy. The costs for services can mean higher costs for citizens overall. (Pg. 41)
List one (1) advantage of a Mixed Economy. The economy provides assistance for some people who might otherwise be left out. (Pg. 40)
What are the seven (7) Economic & Social Goals of the U.S. economy? 1.) Economic Freedom; 2.) Economic Efficiency; 3.) Economic Equity; 4.) Economic Security; 5.) Full Employment; 6.) Price Stability; & 7.) Economic Growth. (Pgs. 44 & 45)
List one (1) example of how goals can be resolved using trade - offs in the U.S. economy. A company eliminates some positions & lets the employees go. They divide those job responsibilities among the remaining employees. In this case, they sacrificed full employment for economic efficiency. (Pg. 46)
What are the five (5) characteristics of a Free Enterprise Economy? 1.) Economic Freedom; 2.) Voluntary Exchange; 3.) Private Property Rights; 4.) Profit Motive; 5.) Competition. (Pgs. 49 & 50)
What does the term "consumer sovereignty" mean/ refer to? It recognizes the idea that consumers are the "rulers" in a free enterprise economy. For example, when consumers choose to buy certain products over others, they "reward" producers with profits, which dictates what goods producers make. (Pg. 51)
What is the purpose of a "chamber of commerce"? This is an organization that promotes the welfare of its member businesses. They sponsor activities ranging from educational programs to lobbying for favorable business legislation. (Pg. 81)
List two (2) political systems that are characterized by having a "Mixed Economy". 1.) Socialist, 2.) Communist.
What does the term "capitalism" mean/ refer to? This term refers to "an economic system where private citizens own the factors of production".
What does the term "market" mean/ refer to? This term refers to "an arrangement that allows buyers and sellers to come together to exchange goods and services".
What is one (1) example of a group of people who practice a "traditional economy" in their society. One example of this are the Aborigines from Australia.
What does the term "economic system" mean/ refer to? This term refers to "an organized way of providing for the wants and needs of (a society's) people".
What does the term "price ceiling" mean/ refer to? This term refers to "the highest price that a producer can legally charge for a good or service".
What does the term "price floor" mean/ refer to? This term refers to "the lowest price that a producer can legally charge for a good or a service".
What does the term "minimum wage" mean/ refer to? This term refers to "the lowest legal wage that can be paid to most workers".
Complete the following sentence: "Minimum wage is an example of a ________________________________." Price floor.
What is one (1) thing that "price floors" result in? These result in a "surplus" because producers have so much capital (i.e. money) due to the minimum pricing that they are able to make more goods, but consumers are not willing to pay the higher prices.
What is one (1) thing that "price ceilings" result in? These result in a "shortage" because consumers want to buy more of the product due to the lower price, but producers are not able to meet that level of consumer demand due to lack of capital (i.e. money).
What is one (1) thing that instituting a "minimum wage" CAN do to an economic system? This MIGHT result in higher levels of unemployment as employers need to cut back on the number of employees they have in order to institute the pay raises required by the "minimum wage".
What does the term "limit order" mean/ refer to? This is the term for "an order to buy or sell a stock at a specific price or better".
List two (2) advantage of international trade. 1.) Consumers have access to goods they would not otherwise be able to purchase; 2.) This encourages communication between people from countries who would not otherwise contact each other.
List two (2) disadvantages of international trade. 1.) Can lead to slightly higher prices for goods as producers pass on the cost of shipping goods to their customers; 2.) Larger (1st world) countries have more power and tend to dictate things such as value.
In the "international trade" activity that we did in class, what "drove" value? In that activity, scarcity drove value as everyone tried to trade and get as many different types of resources as they could.
What does the term "social security" mean/ refer to? This term refers to "a federal program of disability and retirement benefits that covers most working people".
What does the term "inflation" mean/ refer to? This term refers to "a rise in the general level of prices".
What does the term "free enterprise" mean/ refer to? This term refers to an economic system in which resources are privately owned and competition is allowed to flourish with a minimum of government interference. It is NOT the same thing as "capitalism"!
What does the term "profit" mean/ refer to? This term refers to a financial gain, especially the difference between the amount earned and the amount spent in producing a good or operating a business.
What does the term "consumer sovereignty" mean/ refer to? This term refers to the idea that, in a "free market economy", consumers "rule" the market by virtue of the choices that they make regarding which goods and services to buy.
List the four (4) roles that the U.S. government plays where economics is concerned and how do they fulfill each of these? 1.) Protector-By enforcing economic laws; 2.) Provide -By supplying citizens with goods and services (such as a legal system); 3.) Regulator-Overseeing things such as the banking system; 4.) Consumer-By purchasing goods to fulfill their various roles.
What does the term "Black Market" mean/ refer to? This term refers to any unregulated economic activity that occurs outside of an established economic system.
How do "Black Markets" typically develop? These typically develop when a system of "price floors" is instituted. People buy goods that are in high demand but are very scarce, then sell them through private economic exchanges at much higher prices than they paid.
What does the term "comparative advantage" mean/ refer to? This term refers to "an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners".
What does the term "absolute advantage" mean/ refer to? This term refers to "the ability of an individual, company, region or country to produce a good or service at a lower cost per unit than another entity that produces the same good or service".
How did we determine which country had an "absolute advantage" when we completed our "Gains from Trade & Comparative Advantage" problems? We determined this by looking at the numbers in our Production Chart BEFORE we computed the "Opportunity Cost" of each good for each country.
How did we determine which country had an "comparative advantage" when we completed our "Gains from Trade & Comparative Advantage" problems? We determined this by comparing each country's "opportunity cost" for each good on the Production Chart. The country with the lowest opportunity cost had the "comparative advantage" for that good.
Created by: sticklerpjpII