Economic Basics
This economic problem exists because resources are limited but wants are unlimited.
What is scarcity?
Law stating that as price increases, quantity demanded usually decreases.
What is the law of demand?
An economic system where most resources are privately owned.
What is capitalism?
The total value of all final goods and services produced in a country in one year.
What is Gross Domestic Product (GDP)?
People who are jobless, actively looking for work, and available to work.
Who are the unemployed?
What you give up when you make a decision.
What is opportunity cost?
The point where quantity supplied equals quantity demanded.
What is equilibrium?
An economic system in which the government owns and controls major industries.
What is communism?
One thing that is not counted in GDP.
What is used goods / transfer payments / illegal activities?
Unemployment caused by workers changing jobs.
What is frictional unemployment?
The study of how individuals, businesses, and governments make choices to allocate scarce resources.
What is economics?
A change in demand caused by something other than price (income, tastes, population).
What is a shift in demand?
The economic system of the United States.
What is a mixed economy?
GDP divided by the population.
What is GDP per capita?
Unemployment caused by a lack of skills needed for available jobs.
What is structural unemployment?
A graph that shows combinations of two goods that can be produced with limited resources.
What is a production possibilities curve (PPC)?
A government-set maximum price meant to keep goods affordable.
$400: What is a price ceiling?
The four factors of production.
What are land, labor, capital, and entrepreneurship?
Which component of GDP includes spending on schools, roads, and defense?
What is government spending?
Unemployment caused by economic downturns.
What is cyclical unemployment?
An increase in overall efficiency and output due to specialization.
What is specialization?
What happens when quantity supplied is greater than quantity demanded?
What is a surplus?
The freedom to start a business, choose a job, and own property.
What is economic freedom?
Why GDP alone does not fully measure a nation’s standard of living.
What is GDP doesn’t measure income distribution, quality of life, or the underground economy?
Why discouraged workers are not counted in the unemployment rate.
What are discouraged workers (not actively looking)?