Scarcity & Basics of Economics
What is economics?
The study of how people make choices when resources are limited.
What are What to produce? How to produce? For whom to produce?
The three basic questions every economy must answer.
What is quantity demanded?
When price goes down, this usually goes up.
What is the business cycle?
The pattern of economic growth and decline over time.
What is medium of exchange?
Money used to buy goods and services.
What is scarcity?
When resources are limited but wants are unlimited.
What is a command economy?
In this system, the government makes most economic decisions.
What is equilibrium price?
The point where supply and demand meet.
What is GDP (Gross Domestic Product)?
The total value of all final goods and services produced in a country in one year.
What is unit of account?
Money used to compare the value of goods and services.
What is opportunity cost?
The next best alternative you give up when making a choice.
What is a market economy?
In this system, consumers and businesses make most economic decisions.
What is profit?
Money earned after costs are subtracted from revenue.
What is inflation?
A general rise in prices over time.
What is the Federal Reserve?
The central bank of the United States.
What are needs?
Things you must have to survive, like food and shelter.
What is a mixed economy?
This system combines elements of both command and market systems.
What is a change in quantity demanded or supplied?
A change shown by movement along the curve caused only by price change.
What is the Consumer Price Index (CPI)?
The index used to measure changes in the price level over time.
What is fiscal policy?
Government spending and taxation used to influence the economy.
What are goods?
Physical items you can buy and hold in your hand.
Who are consumers and producers?
In a market economy, this group mainly answers the Big 3 questions.
What is a shift in supply or demand?
A change caused by something OTHER than price that moves the entire curve.
What are demand-pull inflation and cost-push inflation?
Two major causes of inflation.
What is economic interdependence?
When countries rely on each other for goods and services.