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Final (2025)
| Question | Answer |
|---|---|
| Economics is the science that studies _____ in a world of scarcity. | how people make choices (or how people satisfy their unlimited wants) |
| _________ is the most highly valued alternative forfeited when a choice is made. | Opportunity cost |
| _____________ is the branch of economics that deals with human behavior and choices as they relate to the entire economy. | Macroeconomics (National economics) |
| _______ is the condition in which our wants are greater than the resources available to satisfy all those wants. (limited resources & unlimited wants) | Scarcity |
| All the natural resources found in nature, such as mineral deposits, water, forests, and animals are ______________ | land |
| Labor earns ____________ , land earns ____________ , capital earns ________________ , while entrepreneurship earns ____________________. | wages; rent; interest; profits |
| You should ignore ___________ cost in making economic choices because they are costs that cannot be recovered. | sunk |
| An example of a _______________ (good or service) would be teaching. | service |
| ________________ includes all human creations used to produce goods and services. | capital goods |
| An ___________________ is a person who develops a new product or process, seeks profit, and assumes the risk of profit or loss. | entrepreneur |
| Human (Labor), natural (land) , capital (tools), and entrepreneurship are called ___________________. | factors of production (also called inputs and productive resources) |
| The physical and mental effort you are using to study for this test is called ______________. | labor |
| The assumption of rational _____________________ means that people will generally make the best choice for themselves. | self-interest |
| The statement "Mr. Frost is a teacher" is an example of __________________ analysis. | positive |
| ____________________ focuses on the economic behavior of individuals or individual markets, but not on the economy as a whole. | Microeconomics |
| The four main factors of production are ______, ________, ____________ and ___________ | land, labor, capital, and entrepreneurship |
| _______________ analysis is a statement of opinion and states what "should be." | Normative |
| _________________ analysis is a statement that can be supported by facts and states "what is. | Positive |
| Steve Jobs starting Apple would be an example of _____ , a tree would be an example of ______ , the hammer used by a carpenter would be an example of _____ , and a teacher would be an example of _____ . | entrepreneurship; land; capital; labor |
| This is an economic system in which the allocation of scarce resources, and other economic activity, is the result of ritual, habit, or custom. | traditional |
| This is an economic system characterized by a central authority that makes most of the major economic decisions. | command |
| This is an economic system in which supply, demand, and the price system help people allocate resources and make the WHAT, HOW, and FOR WHOM to produce decisions. | Market (Free-enterprise or capitalism) |
| North Korea has what type of economic system? | command |
| The United States has what type of economic system? | Market (Free-enterprise or capitalism) |
| The Australian Aborigines have what type of economic system? | traditional |
| Which type of economic system has the most individual freedom and encourages innovation? | Market (Free-enterprise or capitalism) |
| Which type of economic system has the most government control over people's lives? | command |
| In this type of economic system, you are most likely to perform work the same way your ancestors did. | traditional |
| Capitalism and free-enterprise are other names, or synonyms, for a _________________ economy. | market |
| True or False: Pure traditional, market, and command economies are rare, if exist at all, is one reason why mixed economies exist. | True |
| True or False: A major event like severe economic decline or revolution may cause an economy to adopt changes that include aspects of the other systems and is one reason why mixed economies exist. | True |
| Who wrote The Wealth of Nations and is considered the father of economics? | Adam Smith |
| ______________ indicates how much of a product consumers are both willing and able to buy at each possible price given a period of time. | Demand |
| The law of demand states that price and quantity demanded have a(n) ________________ relationship. | inverse |
| As price goes up, the quantity demanded goes _______ , and as price goes down, the quantity demanded goes _________. | down; up |
| The _____________ states that when the price of a product goes up, people will substitute for a cheaper good. | substitution effect |
| The _________ is when an individual's income can buy more of all goods when the price of one good declines. | income effect |
| The __________ states that as a person consumes additional units of a good, eventually the utility gained from each additional unit of the good decreases | law of diminishing marginal utility |
| _________________________________ is the amount of product that consumers are willing an able to buy at a specific price. | Quantity demanded |
| The sum of the individual demands of all consumers in the market is called the ______________________________. | market demand |
| The demand curve slopes _________ and has a _____________ slope. | down; negative |
| A _________________ along a demand curve is caused by a change in price and results in a change in the quantity demanded. | movement |
| A ___________ of the demand curve is caused by one of the determinants of demand other than price and results in a new demand curve. | shift |
| A change in preferences in favor of a good shifts the demand curve to the ___________ . | right |
| An increase in income shifts the demand curve of normal goods to the _________ . | right |
| With complementary goods, the demand for one good moves in the ___________ direction as the price of the other good. | opposite |
| With substitutes, the demand for one good moves in the ____________ direction as the price of the other good. | same |
| The determinants (cause shifts) of demand are: | (1)ncome; (2)Tastes; (3) Price of a substitute or Price of a complement; (4) Expectations; (5) Size or Composition of the Population |
| Economists assume producers try to maximize ______________. | profit |
| ___________ indicates how much of a product producers are both willing and able to sell at each possible price during a given period of time. | Supply |
| The law of supply states that price and quantity supplied have a ___________ relationship. | direct |
| As price goes up, the quantity supplied goes ____________ , and as price goes down, the quantity supplied goes ______________. | up; down |
| ___________________ is the amount of product that producers are willing an able to sell at a specific price. | Quantity supplied |
| The sum of the individual supplies of all producers in the market is called the ______________________________. | market supply |
| The supply curve slopes up and has a _____________ slope. | positive |
| What are the factors that cause a shift in supply? | 1. Cost of resources 2. Productivity 3. Changes in technology 4. Expectations 5. Number of sellers in the market 6. Taxes/subsidies 7. Government regulations |
| A business that is owned by one individual who makes all the business decisions and is legally responsible for the debts of the firm is a ________________________________ . | sole proprietorship |
| Two or more persons own and run this type of business. | partnership |
| __________ is a form of business organization recognized by law as a separate entity and owned by its shareholders | Corporation |
| A business investment that involves renting or leasing another successful business model | franchise |
| This type of business has to deal with double taxation. | corporation |
| Sole proprietorships and general partnerships face _______________ liability, meaning owner’s personal assets may be used to pay off the debts of the firm. | unlimited |
| Apple would be an example of what type of business firm? | corporation |
| A major law firm would be an example of what type of business firm? | partnership |
| A lemonade stand would be an example of what type of business firm? | sole proprietorship |
| The making of a direct funding appeal to a “crowd” of possibly interested investors on a social networking platform is called _________. | crowdfunding |
| A provider of investment funds to a start-up business in exchange for partial ownership of the business is called a __________ . | venture capitalist |
| Investors who provide funds to less-promising start-ups and more interested in survival of business rather than return on investment are called ________ . | angel investors |
| Places where entrepreneurs can receive the training and other assistance to build a successful start-up business are called ______. | incubators |
| The total market value of all final goods and services produced annually in an economy is called __________ , or GDP. | gross domestic product |
| A good that has not yet reached its final user is called an _______________ , and is not counted in GDP. | intermediate good |
| The services of a worker who is always paid in cash, the services of unpaid household workers, and the purchase of a used car is(are / are not) ____________ counted in the GDP. | not counted |
| When C stands for ____________ , I for _________________ , G for ____________ expenditures, X for net ___________ , then the following equation shows how to calculate GDP: GDP = C + I + G + X. | consumption; investment, government; net exports (exports - imports or X - M) |
| Of the four categories of spending, _____________________ accounts for the largest amount. | consumption |
| __________ personal income is your personal income after subtracting out taxes paid. | Disposable |
| What do economists call a general rise in prices? ____________________ a general decline in prices? _____________________ | inflation; deflation |
| GDP adjusted for price changes, or inflation, is called __________ | real GDP |
| What is the CPI and what does it measure? | consumer price index and it measures the rise and fall of prices for consumer goods and services |
| What is per capita GDP and why is it useful? | GDP divided by population and allows economists to compare countries of different sizes |
| ___________ represents the total spending in the economy at alternate price levels and the slope of this curve is _________________. | Aggregate demand (AD); negative |
| ____________ represents the total output of the economy at alternate price levels and the slope of this curve is ________________. | Aggregate supply (AS);positive |
| _________ inflation is caused by increasing demand for output while ________________ inflation is caused by rising costs of production. | Demand-pull; cost-push |
| If aggregate demand falls , the equilibrium level of income (real GDP) _________ and unemployment ___________ . | falls; rises |
| An increase in aggregate supply leads to a(n) ________________ in the equilibrium level of national income and _____________ prices. | increase; lower |
| If income, wealth, and/ or population growth increases, then consumption __________. | increases |
| Higher taxes lower disposable income and __________________ consumption. | decreases |
| If interest rates fall then investment (the amount that businesses spend on capital goods) will ____________. | increase |
| When the price level falls, the value of household and business assets (increases / decreases) ________ . Households and firms spend (more / less) __________ , and aggregate expenditures (rise / fall) ___________ . This is called the ___________ effect. | increases; more;rise;wealth |
| When prices increase, people and businesses need ______ money. They _______ bonds, causing interest rates to __________ and investment and aggregate expenditures to ___________. This is called the ________ effect | more; sell; rise ;fall; interest rate effect |
| When the price level falls, domestic goods become _______________ for foreigners. Net exports____________ , and aggregate expenditures__________. This is called the __________ effect. | cheaper; increase; increase; international trade |
| The __________ -run is the period of time when costs are variable and the ______ -run the period of time is when all production costs remain constant. | long run; short run |
| ____ indicators change before real GDP changes, ____ indicators are economic variables that tend to change at the same time real output changes, and variables that do not change their value until after the value of real GDP has changed are called ______ | leading; coincident; lagging |
| A worker changing jobs is considered ______________________ unemployed. | frictionally |
| Increasing use of computers or robots may cause _____________________ unemployment. | structural |
| The labor force includes those ___ yr. of age or older who are _____________ for work or who are currently ___________ | 16; looking; working |
| A person who loses her job at the mill because the market for wood has hit a recession is considered _________________ unemployed. | cyclically |
| A strawberry picker who is out of work because the season is over is considered _________________ unemployed. | seasonally |
| A civil engineer working as a math tutor would be considered _______. | underemployed |
| To lower inflation, the Fed should target a ___________ federal funds rate. | higher |
| To fight unemployment, the Fed should target a ________ federal funds rate. | lower |
| To reach its target of a lower federal funds rate, the Fed should _________ its administered rates. | lower |
| When the Fed eases the money supply to create economic growth and lower unemployment, it may cause prices to _____. | increase |
| The Federal Reserve System is ______________________ Congress and the President. | independent of |
| The central banking system of the United States is called the _____________. | Federal Reserve |
| The Federal Reserve System is controlled by ________. | the Board of Governors |
| If the FOMC decides there are not ample reserves in the banking system and wants expand the money supply, it will _______ government bonds. | buy |
| What tool does the Fed rely on most in conducting monetary policy? | interest on reserve balances (IORB) |
| To reduce high inflation the government must ________ spending and the Federal Reserve should ______________ its administered rates. | decrease; increase |
| Oregon is in the _____ Federal Reserve District which has a Federal Reserve Bank in _______. | 12th; San Francisco |
| An increase in income shifts the demand curve for inferior goods to the ___________ | left |
| An increase in income will not cause a shift in either direction of a demand curve for _______________goods. | neutral |
Created by:
teacherdavidfrost
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