Units 1 & 2
In economics, does everything (including air and water) have a cost?
Yes!
In general, has the United States government increased or decreased its influence on the American economy?
Increased
What is one way that governments affect the wages workers are able to earn?
Governments typically set minimum wages
How would you define GDP?
GDP or gross-domestic product measure the total of all spending in an economy
True or false: Free trade tends to lower prices and increase quality of goods
True
What two factors typically set prices?
a) law and order
b) greed and corruption
c) supply and demand
d) forgiveness and friendship
c) supply and demand
What is a market failure and what is one example?
A market failure occurs when the private market is not able to adequately serve the needs of the public. Education, health care, parks, and so on are common areas of market failure
How do labor unions affect wages, benefits, and worker conditions?
Labor unions typically increase wages, benefits, and worker conditions
What is the difference between nominal and real GDP AND which one should be used to measure economic growth?
Nominal GDP does not adjust for inflation while real GDP does. Real GDP should be used to measure economic growth.
What are at least two benefits of global trade?
Higher cost of war
More efficient production of products
Lower price and higher quality of products
How would you explain the difference between the term 'tradeoff' and the term 'opportunity cost'?
Tradeoffs are any alternative of value that you are giving up to do what you are doing.
The opportunity cost is the best alternative to what you are doing.
Negative externalities have a few key components:
1. They are created
2. No one initially pays for them
3) They cause significant harm and 'costs' to the public
What is one example of a negative externality
Pollution
What is human capital?
Human capital is the skills, knowledge, and experience that humans bring to an organization
What are the three goals of most economies?
Economic growth
Low unemployment
Stable prices
What are at least two negatives or challenges of free trade?
Environmental health and labor conditions are usually not prioritized. Wealth inequality usually remains.
In the market for strawberries, doctors announce that eating more strawberries makes you healthier. What happens to the demand for and price of strawberries?
Demand for strawberries will increase causing the price of strawberries to increase, as well
The largest part of the US budget is mandatory spending. What are the three programs that take up the vast majority of the US mandatory spending?
Medicare
Medicaid
Social Security
What are some ways that the government can help reduce wealth inequality?
Taxing the wealthy to fund social programs
Investing in public education and healthcare
What is the period of growth in the business cycle referred to as? What is the period of shrinking in the business cycle called?
Expansionary phase and contractionary phase
What are at least two protectionist policies? (protectionist policies are policies that reduce free trade)
Tarrifs
Quotas
Embargoes
Explain the difference between command economies, market economies, and mixed economies
Command economies are centrally planned by the government
Market economies are left to the private sector (with no government influence)
Mixed economies are a combination of private sector and government sector influence
Explain three ways the United States government has become more involved in the US economy AND why these involvements serve its population.
(Hint: Medicare, medicaid, and social security can count as one of the three ways the US government has influenced the economy)
The US government has created social programs like medicare, medicaid, and social security to provide financial and health benefits to the most vulnerable.
The US government has established labor laws to protect workers.
The US government has created regulatory agencies like the EPA and FDA to protect its people from market failures
What is an argument in favor of tariffs?
AND
What is an argument in opposition of tariffs?
Argument in favor of tariffs -- Tariffs will raise the the cost of foreign goods which will incentivize consumers to purchase domestically produced goods, encouraging corporations to keep their business in the country
Argument against tariffs -- Tariffs will raise the price of everyday goods for consumers and won't convince companies to return their jobs back to the home country quickly enough
What can the US Congress and/or the Federal Reserve do to try to minimize extreme fluctuations in an economy?
When inflation is rising, the Federal Reserve can raise interest rates to slow borrowing and spending...
When in a recession, the Federal Reserve can lower interest rates to increase borrowing and spending...
When the economy is overheating, the US Congress can reduce government spending to slow inflation...
When the economy is struggling, the US Congress can increase government spending to stimulate the slowing economy
What is the human development index and what does it measure?
The human development index is a measure of health in an economy. It measures life expectancy, education, and income