Supply & Demand
What happens to the price of a good when demand increases and supply stays the same?
The price increases.
What is the name of the tax you pay on goods at the time of purchase?
Sales tax
What is the currency used in most of the European Union?
Euro
A general rise in prices over time.
Inflation
What market structure has many sellers offering identical products?
Perfect competition.
What do we call a good that people buy more of when their income increases?
A normal good.
Which organization controls monetary policy in the U.S.?
The Federal Reserve
What do we call a tax on imports?
A tariff
The money a business earns from selling goods and services.
Income
What market structure is dominated by just a few large firms?
Oligopoly
If the price of a substitute good goes up, what happens to demand for the original good?
It increases
What’s the term for government spending being greater than revenue?
Running a budget deficit.
What is it called when a country imports more goods and services than it exports?
A trade deficit.
When businesses spend money on things like buildings, tools, or machines.
Investment
What is it called when only one seller controls the entire market?
Monopoly
What economic concept is illustrated when a decrease in price leads to an increase in quantity demanded?
The Law of Demand
What government tool is used to discourage negative externalities by increasing the cost of harmful behavior?
A tax (or Pigovian tax)
Name one specific benefit of free trade that allows consumers to purchase goods like electronics and clothing at lower prices.
lower consumer prices
The cost of borrowing money, usually shown as a percentage.
Interest rate
What market structure features many sellers offering similar but not identical products (like fast food)?
Monopolistic competition
What’s the term for when supply equals demand?
Market equilibrium.
What’s the term for a policy of cutting taxes and increasing spending to stimulate the economy?
Expansionary fiscal policy.
What international organization promotes global free trade?
World Trade Organization
What term describes a good that is produced in a foreign country and brought into the home country for sale?
Import
What’s a key difference between monopolistic competition and perfect competition?
In monopolistic competition, products are differentiated; in perfect competition, they are identical.