Basic Economics
This term describes the study of how individuals and societies choose to allocate scarce resources.
What is economics?
According to this law, as price increases, quantity demanded decreases
What is the law of demand?
The benefit or cost experienced by parties not directly involved in a transaction is called this
What is an externality?
This policy sets a legal minimum price that must be paid for goods or services.
What is a price floor?
This is calculated as the total value of goods and services produced in a country in a year.
What is GDP (Gross Domestic Product)?
An economic system where all resources and means of production are owned by private individuals is called this.
What is a free market economy?
The price where quantity demanded equals quantity supplied is called this.
What is equilibrium price?
This type of good is non-excludable and non-rivalrous, like national defense.
What is a public good?
This fiscal policy tool involves government spending on infrastructure to stimulate economic growth.
What is Supply side Economics
This macroeconomic problem occurs when the general price level is rising continuously
What is inflation?
This is the dilemma that forces individuals and societies to choose among alternatives.
What is scarcity?
This term describes a good for which demand increases when income increases.
What is a normal good?
This occurs when one party in a transaction has more information than the other.
What is information asymmetry?
This type of tax is called an indirect tax as it is paid to the government but indirectly
What is a sales tax, VAT, GST
This economic indicator measures the percentage of the labor force that is unemployed but actively seeking employment
What is the unemployment rate?
This graphical representation shows the maximum combinations of two goods that can be produced given limited resources.
What is a production possibility frontier/curve?
This occurs when there is too much supply and not enough demand at the current price.
What is a surplus?
This government policy aims to reduce negative externalities by making the producer pay for external costs.
What is a pollution tax?
This describes the government taking ownership of a previously privately-owned industry.
What is nationalization?
This economic theory suggests that cutting business taxes and reducing regulations stimulates business activity.
What is supply side economics
The concept that explains why diamonds are expensive and water is cheap despite water being essential for life.
What is the paradox of value?
This elasticity measures the responsiveness of demand to changes in the price of another good.
What is cross-price elasticity of demand?
This concept refers to a good that would be underprovided if left to the market, but benefits society.
What is a merit good?
These are payments made by the government to producers to lower the cost
What are subsidies?
This occurs when an economy experiences both high inflation and high unemployment simultaneously.
What is stagflation?