Economic Systems & Markets
What three basic economic questions must every society answer because resources are scarce?
What to produce, how to produce it, and for whom to produce it.
During weak economic activity, the government increases its purchases to encourage spending and boost aggregate demand. What type of policy is this?
What is expansionary fiscal policy?
What is the difference between gross pay and net pay?
Gross pay is earning before deductions, net pay is what remains after deductions.
What is the value of the next-best alternative you give up when making a decision?
What is opportunity cost?
What should you generally try to do with your credit card statement balance by the due date to avoid interest on ordinary purchases?
Pay the statement balance in full by the due date, subject to the card's terms.
In this type of economy, central planners or the government make many production decisions.
What is a command economy?
What is the main difference between fiscal policy and monetary policy?
Fiscal policy uses government spending and taxation; monetary policy influences money, credit, and interest rates and is conducted by the Federal Reserve.
This type of tax takes a larger percentage of income from lower-income people than from higher-income people.
What is a regressive tax?
A country can produce a good at a lower opportunity cost than another country. What does it have?
What is comparative advantage?
A credit card advertises 0% interest, but interest may be charged retroactively if the entire balance is not paid by the promotional deadline. What is this called?
What is deferred interest?
This market structure has one dominant seller and high barriers that make it difficult for competitions to enter.
What is a monopoly?
Environmental regulations can reduce pollution, but they may also raise production costs. Name one likely short-run market effect of those higher costs.
Supply shifts left, causing equilibrium price to rise and equilibrium quantity to fall.
Name two common deductions that may be taken from an employee's paycheck.
Federal income tax, state income tax, Social Security, Medicare, health insurance, or retirement contributions.
One country grows cotton, another turns it into fabric, and another manufactures machines used in production. What economic strategy does this illustrate?
What is specialization?
Name two things a consumer should check before accepting promotional credit card offers.
The deadline, whether interest is deferred or waived, regular APR fees, minimum payments, penalty terms, or balance needed to avoid interest.
Consumers begin preferring a product for reasons unrelated to its price. What happens to its demand curve?
It shifts to the right if demand increases.
Stock-market indexes often change before the broader economy does. What type of economic indicator are they?
What are leading indicators?
What does FAFSA stand for, and what is its main purpose?
Free Application for Federal Student Aid; it is used to determine eligibility for federal student aid.
Trade can lower prices for consumers but may cause workers in some local industries to lose their jobs. What is this negative consequence called?
What are local adjustment costs?
A consumer wants to avoid an unexpected deferred-interest charge. Name two practical steps they can take.
Set payment reminders or autopay, calculate payments needed to clear the balance before the deadline, avoid new purchases, and keep the terms.
A product sells for $10, but at that price consumers want 100 units while businesses supply only 60 units. Is there a surplus or a shortage, and by how many units?
What is a shortage of 40 units?
This federal agency regulates securities markets and requires public companies to disclose important financial information.
What is the Securities and Exchange Commission (SEC)?
An employee's gross pay increases by $200, why might the employee's net pay increase by less than $200?
Because additional taxes or other paycheck deductions may reduce the amount of the increase.
Name one government policy that could help workers who lose their jobs because an industry relocates overseas.
Job retraining, apprenticeships, temporary income support, job search assistance, relocation assistance, or regional economic-development investment.
A student can afford only the minimum payment on a promotional credit card balance and has not checked the deadline or regular APR. What should the student do before accepting the offer?
Review the agreement, confirm the promotional deadline and interest terms, check the regular APR and fees, calculate the payment needed to clear the balance on time, and compare alternatives.