Economics Basics
The economic problem of scarcity means that:
A) Supply of goods and services is greater than demand.
B) Prices of goods and services are greater than their value.
C) Costs of production exceed benefits.
D) Wants exceed available resources.
D) Wants exceed available resources.
There is little government ownership of farms and businesses in the country of Mala. People may change jobs and start new businesses. The government does not control prices and wages. What type of economy is Mala?
Market Economy
What does IRDL stand for?
INCREASE
RIGHT
DECREASE
LEFT
Which of the following is NOT one of the economic indicators?
A) Discount Rate
B) Unemployment
C) Inflation Rate
D) GDP
A) Discount Rate
How do trade barriers typically affect consumers?
A) They lower domestic prices
B) They improve product quality
C) They increase product variety
D) They reduce consumer choice
D) They reduce consumer choice
George can fix 4 flat tires or type 200 words. His opportunity cost of fixing 4 flat tires is
200 words
Which of the following is NOT characteristic of a command economy?
A) Each person is assigned a specific job
B) Each collective or factory sets it’s own goals
C) The central government makes all economics decision
D) The central government owns all the land and capital
B) Each collective or factory sets it’s own goals
Advances in technology generally lead to:
A) Lower output
B) Higher prices
C) Lower wages
D) Increased productivity
D) Increased productivity
Increasing unemployment benefits to boost economic equity results in an opportunity cost of:
A) Security (more jobs)
B) Freedom (more taxes)
C) Growth (more spending)
D) Efficiency (better resource use)
B) Freedom (more taxes)
The producer that can produce the most output or requires the least amount of inputs has the
A) Comparative advantage
B) Absolute advantage
C) Production advantage
D) Trading advantage
B) Absolute advantage
An engineering degree from a university belongs to which resource group?
Human Capital
Which of the following would be an example of economic stability?
A) Prices remain at a constant level across the country
B) Government creates laws to protect people across the country
C) Low unemployment rate exists across the country
D) Resources are distributed equally across the country
Prices remain at a constant level across the country
How is minimum wage an example of a price floor?
It is the lowest amount you can be paid
How can the FED increase the money supply? (Hint: there are three ways)
-Buy Bonds
-Decrease Discount Rate
-Decrease Reserve Requirement
What happens if a high tariff is placed on imported steel?
A) Prices go down
B) U.S. consumers pay more
C) Foreigners buy more U.S. goods
D) U.S. iron ore reserves decrease
B) U.S. consumers pay more
Which of the following items would be considered scarce? (HINT: There may be multiple answers)
1. Gold
2. Time
3. Education
1. Gold
2. Time
3. Education
What is a key characteristic of a traditional economy?
Economic activities are based on customs, traditions, and ancestral practices
Imagine you're shopping for a new phone, but you hear that next month, a brand-new model with better features is coming out. Plus, the price of the current model will drop when the new one is released.
What do you think will happen to the demand for the current model this month?
Demand will decrease because people will wait for the new model.
What are the 2 tools of fiscal policy?
taxes & government spending
A tariff is best defined as:
A tax on imported goods
Define Opportunity Cost
The next best alternative in a situation (what you give up)
Which economic goal focuses on making the best use of scarce resources to produce goods and services?
Economic Efficiency
Market: Cotton Candy Grapes
Scenario: Additional farmers start to grow cotton candy grapes because they heard it was profitable.
What will happen to supply? What is the determinate causing this change?
Number of sellers, the supply will increase
If the unemployment rate is rising and GDP is falling, the fiscal policy action that should be used is…
Decrease taxes - contractionary policy
John can produce 10 shirts or 25 hats, Jan can produce 16 shirts or 24 hats. Who has the comparative advantage in hats?
John