Macro 1
In a command economy, who typically makes the major economic decisions?
The Government
What is the primary incentive for businesses in a market economy?
To maximize profits
If demand for a good is very responsive to a change in price, is that good elastic or inelastic?
Elastic
What is the point where the supply and demand curves meet?
Equilibrium (price)
What is a budget?
A plan for how you will spend and save your income
In a market economy, who decides prices?
Producers
What does GDP stand for?
Gross Domestic Product
What does the Law of Demand state?
As price increases, quantity demanded decreases.
What does the Law of Supply state?
As price increases, quantity supplied increases.
What is the difference between simple interest and compound interest?
Simple interest applies only to the original investment, compound interest includes prior interest as well
The circular flow model in economics represents the flow of:
Goods and services between households and firms
What is the primary function of the Federal Reserve?
To set monetary policy
What happens to the demand curve when the price of a related good goes down?
A shift to the right
What happens to the supply curve when there is a technological advancement in production?
It shifts to the right
What does S&P 500 stand for?
Standard & Poor's 500
In economics, what are "incentives"?
Motivations that influence behavior
Give the formula for calculating GDP
A natural disaster would lead to what kind of change to the supply curve?
A shift to the left
Is demand for pizza elastic or inelastic?
Elastic
Give one of the seven rules for improving your financial life
1 Get a Good Education
2 Work hard, long, and smart
3 Learn money-management skills
4 Spend less than you could spend
5 Save early and often
6 Invest in common stocks for the long term
7 Gather information before making decisions
Government spending is an example of which type of policy?
Fiscal Policy
What is the primary source of government revenue?
Taxes
A steep demand curve is representative of what?
Inelastic demand
A shallow supply curve indicates what?
Inelastic supply
Why should you invest for the long term instead of the short term?
You can make a better return (more money) in the long term due to compound interest