Graphs and Tables
What is the chief advantage of the line graph over the schedule?
it contains more data
The government spending less than it receives is known as a
budget surplus
The government spending more than it receives is known as
a budget deficit
Give an example of dissaving
Answers will vary
taking out a mortgage
What is the most important factor of production?
entrepreneurship
On a PPC graph, any point on the graphed line represents _______________.
production efficiency
payments made in exchange for factors of production
factor costs
the entire sum that households spend on goods and services
consumption expenditures
What is the heart of the economy that circulates money?
Financial market
From whom do businesses ultimately receive the factors of production?
households
Any point outside the line on a PPC graph indicates....?
the business has overreached its resources
factors of production
the tools used to produce goods and services
real capital
Give an example of a transfer payment.
Answers will vary
ex: unemployment checks, stimulus checks
Give an example of land.
Answers vary
What does PPC stand for? What is the purpose of a PPC graph?
Production possibilities curve; a PPC graph enables an economist to see the maximum feasible amounts of two commodities that a business can produce
List and briefly define the four factor costs
-Rent includes all payments for the use of an owner's property
-Wages are all payments for the labor used to produce goods or services
-Interest is the payments business firms make on borrowed money
-Profit is the difference between the revenues received from the sale of the product and the costs that went into its production
List and briefly explain the factors of production
-Land is all the natural resources that go into the production of goods
-Capital is the goods used to produce other goods
-Labor is human effort that goes into the creation of goods
-entrepreneurship is the activity of creatively combining natural resources, human labor, and capital to develop new and useful goods and services.
What are the two basic elements of the circular flow model?
households and business firms
Give an example of capital
Answers will vary
What are the two primary uses for economic models? Explain.
instruction and prediction; economic models help teachers instruct their students by concretely illustrating economic theories and provide useful mechanisms for predicting economic outcomes
Explain the economic concept of crowing out. What is the danger of this tendency?
Crowding out occurs when governmental borrowing reduces the money available for businesses to borrow. If these funds remain low, businesses will eventually die due to the lack of necessary capital , and unemployment twill increase
What is the purpose of a circular flow model? What are its four major components?
the circular flow model attempts to visually explain how a complete national economy works. The four major components are households, business firms, the government, and financial markets.
What necessary function do financial markets perform in a well-developed economy? What might happen without them?
A financial market takes the savings of households and channels them to businesses so that the financial capital can help business firms operate effectively. Households would have more cash to spend but fewer places to spend it because businesses would slow or close down due to lack of available capital
How does discouraging entrepreneurship affect the flow of new products?
it decreases the flow of new products