Supply & Demand
What happens to price when demand increases and supply stays the same?
Price increases
What is the most competitive market structure?
Perfect competition
What does GDP measure?
The total value of all final goods & services produced in a country in one year
What is a budget?
A plan for income & spending
What is the law of demand?
As price goes up, quantity demanded goes down
What is a monopoly?
One seller controls the entire market for one product.
What is inflation?
A general increase in prices overtime
Define credit score
A number that shows how trustworthy you are at repaying a debt
Define equilibrium price
The price where quantity demanded equals quantity supplied.
Name one characteristic of monopolistic competition
Product differentiation
Define unemployment rate
The % of the labor force that is unemployed and actively looking for a job.
What is interest?
The cost of borrowing money, or the earnings on savings.
Give one factor that can shift the supply curve
Input costs, technology, number of sellers, taxes/subsidies, or expectations.
What is an oligopoly?
A market dominated by a few large firms.
What tool does the Federal Reserve use to influence interest rates?
Open market operations (buying/selling gov't bonds)
What is the difference between a debit card and a credit card?
Debit - uses your own money from your bank account
Credit - borrows money that you repay later
Explain what price floor is and give one example
A minimum legal price set above equilibrium (causes a surplus) Ex. Minimum wage
Explain collusion and why it is illegal
When firms agree to set prices or limit competition, it's illegal because it harms consumers and restricts competition
Explain the difference between real GDP and nominal GDP.
Real GDP - adjusted for inflation
Nominal - current prices
Explain compound interest
Interest earned on the initial amount and on the interest you've already earned.