Unit 1
What are the four factors of production?
Define elastic, inelastic and unitary elastic
Elastic describes demand that is very sensitive to change in price
Inelastic describes demand that is not very sensitive to price changes
Unitary elastic refers to demand whose elasticity is exactly equal to 1
What does ATM stand for?
Automatic Teller Machine
What are the three uses of money?
Medium of exchange, Unit of account, Store of value
Draw the Business cycle
Should include
Expansion, Peak, Contraction, Trough
What is the difference between Scarcity and Shortage?
Scarcity - a situation in which consumers want more of a good or service than producers are willing to make at a particular price
Shortage - a situation in which consumers want more of a good or service than producers are willing to make at a particular price
In a perfectly competitive market, there is not differences between goods/services sold by different ______
firms
What is a credit score?
a numerical expression based on a Level of analysis of a person’s credit files, to represent the credit worthiness of a person
What are the 6 characteristics of money?
Durable, Portable, Divisible, Uniformity, Limited Supply, and Acceptability.
What is the difference between Nominal GDP and Real GDP?
Real GDP accounts for inflation
What are the three economic questions
What goods and services should be produced?
How should these goods and services be produced?
Who consumes these goods and services?
What is an Oligopoly
a market structure in which a few large firms dominate a market
What are the three “C’s“ of credit score
Character
Capital
Capacity
What are the advantages of both saving and investing?
Savings - Low risk, Low reward
Investing - high risk, high reward
What are intermediate goods and final goods? give one example of each.
intermediate goods - products used in the production of final goods
Final goods - the goods that are produced and eventually sold
(Examples may vary)
What is the difference between Medicaid and Medicare?
Medicare covers those Americans over 65
Medicaid covers those who are unemployed
What are Economies of Scale
Economies of scale - factors that cause a producer’s average cost per unit to fall as output rises
What are a few advantages and disadvantages of credit cards
Advantages
-Able to buy needed items now, Don’t have to carry cash, Creates a record of purchase, and more convenient than writing checks
Disadvantages
- Interests, may require additional fees, financial difficulties may arise if one loses track of how much money is spent, and increase impulse buying.
What is the difference between commodity money, Representative money, and fiat money?
Commodity money - objects that have value in and of themselves and that are used as money
Representative money - objects that have value because the holder can exchange them for something else of value
Fiat money - objects that have value because a gov’t has decreed that they are an acceptable means to pay debts
What are two steps that the gov’t take when
initiating Expansionary Policies
initiating Contractionary Policies
initiating Expansionary Policies - Less Spending, Increase taxes
initiating Contractionary Policies - more spending, less taxes
Describe the relationship between firms and households.
A household = a person or group of people living in a single residence
Households own the factors of production and are also consumers of goods and services
The participants in a free market economy are households and firms
● Firm = (business) an organization that uses resources to produce a product or service, which it then
sells Firms transform inputs (factors of production) into outputs (goods and services)
What is a Demand Schedule and Supply Schedule
Demand Schedule - a table that lists the quantity of a good a person will buy at various prices in a market.
Supply Schedule - is a chart that lists how much of a good a supplier will offer at various prices
What are some types of financial institutions?
Commercial banks, Savings and Loan Associations, Mutual Savings Banks, Cooperative Lending Associations, Unions, and Finance companies
What are the five services banks provide?
Storing Money, Saving Money, Loans, Mortgages, and Credit cards
What are the four types of unemployment, and explain each one.
Frictional unemployment - type of unemployment that occurs when people take time to find a job
Structural unemployment - type of unemployment that occurs when workers’ skills do not match those needed for the jobs available
Seasonal unemployment - type of unemployment that occurs as a result of harvest schedules, vacations, or when industries make seasonal shifts in their production schedule
Cyclical unemployment - unemployment that rises during economic downturns and falls when the economy improves