If the economy is producing at a point on a production possibilities curve, what is being shown?
All resources are operating at full employment.
100
What is the law of demand?
The quantity demanded of a good increases when its price falls and vice versa.
100
What are the five types of unemployment?
Frictional, seasonal, structural, cyclical and technological.
100
On a money market graph, a shift of the supply of money to the right shows the government in what kind of state?
Recession
100
What is the result of high interest rates of a country’s currency?
Increased demand for that currency.
200
What is a market economy?
An economy where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.
200
What does it mean when the lines run horizontally across the bottom portion of a price change graph?
It means there is a shortage of a product.
200
What is real GDP?
The value of a nation's outputs of goods and services in a particular year, adjusted for changes in the prices of goods and services from a base year.
200
What is the Federal Funds Rate?
The interest rate that banks charge other banks for borrowing money.
200
What is the result on the supply of money when the demand of that currency increases?
The supply of money decreases.
300
What’s the difference between command and traditional economy?
A traditional economy is an original economic system in which traditions, customs, and beliefs shape the goods and the services the economy produces. A command economy is when government makes decisions.
300
What does it mean when the lines run horizontally across the top portion of a price change graph?
It means there is a surplus of a product.
300
Who is hurt by inflation?
Creditors, people living off fixed incomes and banks who have fixed interest rates.
300
What is supply side economics?
An economic theory holding that bolstering an economy's ability to supply more goods is the most effective way to stimulate economic growth.
300
What are flexible exchange rates?
Forces of supply and demand establish the value of one country’s currency in terms of another country’s currency.
400
What are the seven principles of economics?
1.Scarcity of Resources
2. Cost v. Benefits
3. Thinking at the Margin
4. Incentives Matter
5. Trade Makes People Better Off
6. Market Coordinates Trade
7. Future Consequences Count
400
What is diminishing marginal utility?
As a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.
400
Who gains from inflation?
Debtors, person with a fixed interest rate and people with a fixed rate loan.
400
What are the three tools of monetary policy?
Open market operations, discount rate and required reserve ratio.
400
When there is a high preference in country x for country y’s goods, what happens to country x’s imports?
They increase.
500
Who is Adam Smith and what did he believe in?
Adam Smith was a Scottish philosopher and a political economist. He wrote a book about economy and expressed his belief that the most effective economy was a free-market economy, also known as laissez-faire.
500
What is the definition of quantity demanded?
A term used to describe the total amount of goods or services that are demanded at any given point in time. The quantity demanded depends on the price of a good or service.
500
What is excluded when measuring GDP?
Used items, second hand sales, non-market transactions,
black-market illegal transactions,items not produced in the current year, public transfer payments, private transfer payment and stocks and bonds.
500
What is the difference between discretionary and automatic stabilizers?
A discretionary stabilizer is a law that the government creates to stabilize the economy. An automatic stabilizer is one that happens automatically because the law was created a long time ago.
500
What is the one factor that is good in foreign exchange but bad in all other aspects of the economy?