Economics Fundamentals
What is the fundamental problem of economics that forces people to make choices?
Scarcity
What happens to price when demand increases and supply stays the same?
Price Goes Up
What is the main source of revenue for the U.S. federal government?
Income taxes
What is the most competitive type of market structure, with many sellers of identical products?
Perfect competition
What does GDP stand for?
Gross Domestic Product
What is the value of the next best alternative when a choice is made?
Opportunity Cost
If the price of hamburgers rises, what happens to the demand for hot dogs (a substitute)
Demand goes up
What type of tax takes a larger percentage from higher incomes than lower incomes?
Progressive Tax
Which market structure has only one seller?
Monopoly
Name one of the three basic economic questions every society must answer.
What to produce, how to produce, or for whom to produce
Name the four factors of production.
Land, labor, capital, entrepreneurship
What is the term for when quantity demanded equals quantity supplied?
Market equilibrium
Which government body controls monetary policy in the U.S.?
The Federal Reserve
What is a distinguishing feature of monopolistic competition?
Many sellers offering differentiated products.
What is the main benefit of trade between countries?
Access to goods/services at lower opportunity cost (comparative advantage)
A company decides to produce more shoes instead of other clothing options. What concept is being demonstrated?
Trade-Offs
A business raises its price and total revenue falls. What does this say about demand?
Demand is elastic
Name one government policy that can both stimulate spending and increase the national debt.
Expansionary fiscal policy
Airlines often operate in what market structure, characterized by a few large firms interdependent on each other?
Oligopoly
What is the term for a prolonged downturn in economic activity lasting at least a year?
Depression
On a production possibilities curve, what does a point inside the curve represent?
Under-utilization of resources (inefficient use)
What two groups can shift both supply and demand curves?
Buyers and Sellers
What is the difference between fiscal policy and monetary policy?
Fiscal = government taxing/spending; Monetary = central bank control of money supply/interest rates
What illegal practice occurs when firms secretly agree to set prices or output levels?
Collusion
If the U.S. imports more than it exports, what is this called?
A trade deficit