The Basic Economic Problem
What to produce, how to produce, and for whom to produce.
What are the three basic economic questions every society must answer?
Where quantity demanded equals quantity supplied.
What is meant by market equilibrium?
An organization of workers formed to protect their interests.
What is a trade union?
The total value of goods and services produced in a country.
What is GDP?
Improvement in living standards and quality of life.
What is economic development?
The next best alternative foregone.
What is opportunity cost.
The system where prices adjust to balance demand and supply.
What is a price mechanism?
The cost of borrowing money or reward for saving.
What is interest rate.
A sustained rise in the general price level.
What is inflation?
combines life expectancy, education, and income.
What is HDI (Human Development Index)
Land, labour, capital, enterprise.
What are the 4 factors of production.
A downward-sloping curve showing inverse price-demand relationship.
What is a demand curve.
Accept deposits, lend money, transfer funds, etc.
What are roles of a commercial bank.
Low inflation, low unemployment, growth, trade balance.
What is government economic policy?
Literacy rate, GDP per capita, access to healthcare
What are indicators of living standards?
solar energy
What is a renewable resource?
Pollution, under-provision of public goods, overuse of merit goods, etc.
What is market failure?
Increases efficiency and productivity.
What is how specialization help firms?
Changes in taxes or government spending.
What is an example of fiscal policy?
Low savings, poor infrastructure, high population growth
What are challenges for developing economies?
Because resources are limited, but wants are unlimited.
Why all economies face the problem of scarcity.
To make essential goods affordable and prevent exploitation.
What is why governments might use maximum prices.
Higher prices, less choice, lower quality
What is a disadvantage of a monopoly to consumers.
Raising interest rates discourages borrowing, reduces demand, slows price growth.
What is how interest rates can be used to control inflation?
Reduces demand, limits opportunities, can cause social unrest.
What is how income inequality might affect economic growth?