Economic Systems
An economy where traditions and customs guide production is this type.
What is a traditional economy?
The total dollar value of all goods and services produced in a country each year is this.
What is Gross Domestic Product (GDP)?
This law says that as prices rise, producers will offer more for sale
What is the law of supply?
This stage of the cycle is when GDP grows and unemployment falls.
What is expansion?
This fundamental problem exists because human wants are unlimited but resources are limited.
What is scarcity?
In this system, the government owns resources and makes all economic decisions.
What is a command economy?
This is the consistent rise in the general level of prices over time.
What is inflation?
This law says that as prices fall, consumers will buy more.
What is the law of demand?
This is the highest point of the business cycle.
What is the peak?
If you buy new shoes instead of saving for a concert ticket, the concert ticket represents this.
What is opportunity cost?
A capitalist economy is also called this type of system.
What is a market economy?
This is the percentage of the labor force that does not have a job but is actively looking for one.
What is the unemployment rate?
A new technology makes it cheaper and faster to produce smartphones. The price of smartphones will likely ________.
What is decrease?
When GDP shrinks and unemployment rises, the economy is in this stage.
What is contraction?
This economic indicator measures the average prices of a “basket” of goods like food, housing, and clothing.
What is the Consumer Price Index (CPI)?
In this system, the economy is driven by the people.
What is a market economy?
When inflation increases, this happens to the value of the dollar.
What is decreases?
A new fashion trend makes skinny jeans unpopular, causing stores to have too many pairs in stock. The price of skinny jeans will ________.
What is decrease?
This stage is the lowest point in the business cycle, when unemployment is highest.
What is a trough?
At $200, the price of airline tickets creates more demand than supply. This is called a __________.
What is shortage?
The U.S. has this type of system, combining capitalism with government involvement.
What is a mixed economy?
The formula for GDP is C + I + G + NX. What do those letters stand for?
What are consumption, investment, government spending, and net exports?
A popular coffee shop chain suddenly goes out of business, but the demand for coffee stays the same. The price of coffee from other shops will ________.
What is increase?
A prolonged and severe downturn lasting more than a year is called this.
What is a depression?
Adam Smith is known as the “Father of Economics” and introduced this concept where self-interest leads to social benefits.
What is the invisible hand?