Unit 1
explain the need for economic choice
Consumer wants are unlimited and resources are scarce
the exclusive possession or control of the supply of or trade in a commodity or service.
Monopoly
Who owns the factors of production?
Households
(People)
What is the purpose of expansionary fiscal/monetary policy?
to stimulate the economy and create jobs
What is happening in the economy if GDP has fallen six consecutive months (AKA, 2 quarters)?
Recession
The amount of a good or service that consumers are willing to buy at a particular price is defined as
Quantity Demanded
A student must decide between going to the movies with friends or staying home and studying for a final exam. She chooses to stay home and study. Which economic term describes going to the movies in this scenario?
Opportunity Cost
How will increased supply and decreased demand for a product affect the equilibrium price?
It will increase
How does Congress lowering the tax rate increase consumer spending?
it gives consumers greater disposable income
the overall level of prices in the economy is increasing
Inflation
A new toy is less exciting to a child once he’s played with it for a while is an example of
The Law of Diminishing Marginal Utility
In a market economy, the strongest incentive for entrepreneurship is the opportunity to
Earn a profit on your investment
An infestation of apple worms has destroyed a region’s crop of apples. How would this most likely affect the supply and price of apples?
The supply would decrease, and the price would increase.
What does the World Bank suggest is an acceptable Debt to GDP ratio?
70 ish %
The role of Monetary Policy is to follow the dual mandate. What is the dual mandate?
price stability and maximize employment
What will happen to the market for Jelly if there is a surplus and subsequent price drop of Peanut Butter?
Increased demand
• The market is dominated by a few large firms.
• Companies sell identical goods.
• Producers face high barriers to enter the industry.
These characteristics describe a(n)
Oligopoly
Competition, Supply and Demand, Profit motive, and Private Ownership of the means of production are all examples of what type of economy?
Market Economy
- The unemployment rate has increased from 5% to 10%
- The inflation rate has fallen by 6%
Which action would Congress most likely take to address the conditions on this list?
Increase government spending or Lower Taxes
What is one negative side of an expansionary time in the business cycle?
Inflation
What are the 4 market structures?
Pure Competition, Monopolistic Competition, Oligopoly, and Monopoly
In the circular flow model, money travels from ___________ to ____________ in the resource (factors) market.
Business to Household
Provied 3 examples of Macroeconomic indicators
Unemployment
Stock Market Performance
Inflation
What are the 4 stages of the business cycle
Expansion
Contraction
Peak
Trough
How many total members make up the FOMC?
19