A
The dollar value of all goods and services produced in a country in a year
GDP (Gross Domestic Product)
Which form of economy typically struggles to grow in size but strives for the "equality" of the people?
Command or communist
Are there countries that are fully free market or command economies?
NO
Adam Smith argues that which is better for a prosperous economy: specialization or self-reliance
Specialization
The hope of reward or fear of penalty that encourages a person to behave in a certain way
Incentive
Provide an example of both a positive and negative externality.
Answers may vary
Externalities are UNINTENDED consequences of decisions being made
Provide 1 example of a positive AND negative externality in terms of the creation of interstate highways.
Answers may vary
Population divided GDP is how WHAT is determined?
Standard of Living
Explain the difference between microeconomics and macroeconomics
Micro - household, business, individual decisions
Macro - decisions that affect the whole economy
If GDP growth rate lowers (doesn't increase as much or even drops), what's this a sign of?
Recession
Increasing one's own knowledge or ability through education or training is an example of
Human Capital
What is the name of the argument on how the government should use their funds?
Guns or Butter
Why do some countries select different goals for their economy (hint, there's 5 goals that countries choose from typically)
Because different economies and countries have different focuses
According to Adam Smith and free enterprise, people are always in competition to make what?
Profit
Why is unemployment a factor in determining economic health?
People working and making money creates tax revenue and keeps businesses alive
What is the government's number 1 responsibility in terms of regulations and consumers?
Protect the public health
What are the 3 economic questions that countries/businesses have to answer
What to produce
How to produce it
Who to sell it to
List the 4 factors of production
Entrepreneurs
Land
Labor
Capital (human and physical)
What's the key difference that is measured to determine whether a country as a more free market, mixed, or command economy?
Government involvement in the economy
What causes a government to determine a good should be a "public good" and not remain a privatized industry?
If the benefits outweigh the costs AND if it doesn't make sense for people to pay for it themselves
What factors are used to determine the health of an economy?
GDP growth
Unemployment Rates
Price Stability
List and give an example of how the government can take part in the economy (aside from regulation)
Factor - Labor
Produce - Services
Transferring Money - Taxes
What are the 5 economic goals of societies?
Freedom, Security, Growth, Equity, Efficiency
Describe the invisible hand and what it does
Combination of competition, incentives, and self interest to regulate trade
Money - Purchasing goods, contracts, paying workers, taxes
Labor - In the industries and government
Human - certifications, education, etc.