SMCHS-Economics Topic 2 Test
What are the three economic questions that each country needs to answer?
1-What to produce 2-How to produce 3-Who consumes what is produced
-Adam Smith's book wealth of nations and the main arguments.
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-Know the difference between the four economic systems: command, mixed, free market, and traditional-Difference in advantages and disadvantages.
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-Know the difference between the four economic systems: command, mixed, free market, and traditional-Difference in the definition.
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-Know the difference between the four economic systems: command, mixed, free market, and traditional-Difference in the practice or implementation of this type of economic system.
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-Know the fundamentals of economics and the field that it studies.
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-The role of government in the United States in relation to the trend of history.
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-What are the 5 economic goals outlined in Topic 2?
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-What are the criticisms of each type of economic system?
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-What is an economic good? Give a few examples.
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-What is profit incentive or profit motive?
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-What is the invisible hand? Explain it...
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-What is the market? What capacity does VOLUNTARY EXCHANGE have in a market economy?
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Individual Freedom
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What can cause an economy to achieve more desirable production possibilities?
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GDP
Gross domestic product; the total value of all final goods and services produced in a country in a given year
-Are all of them achievable simultaneously in the American economy? Why or why not?
No because some are achieved at the cost of another
How is the standard of living calculated?
Real GDP Divided by Population
Which value is a more accurate indicator of a country's economy when figuring out the standard of living? Nominal GDP or Real GDP? Why?
Real GDP because it's adjusted for inflation.
Resources
a service or other asset used to produce goods and services that meet human needs and wants
externality?
an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
Economic expansion
an increase in production and employment,
The Market
any arrangement that allows buyers and sellers to exchange things
Profit Incentive
desire to make a profit
What are the four factors of production again? (LLCE)
land, labor, capital, and entrepreneurial ability
Economic Stability
the absence of excessive fluctuations in the macroeconomy
Trade-Off
the act of giving up one benefit in order to gain another, greater benefit
Opportunity cost
the most desirable alternative given up as the result of a decision
Scarcity
the principle that limited amounts of goods and services are available to meet unlimited wants
Competition
the struggle among producers for the dollars of consumers
Macroeconomics
the study of economic behavior and decision-making in a nation's whole economy
Microeconomics
the study of economic behavior and decision-making in small units, such as households and firms
Economics
the study of how people seek to satisfy their needs and wants by making choices
Utility
the usefulness or enjoyment a consumer can get from a service or good.
Economic efficiency
when all goods and factors of production in an economy are distributed or allocated to their most valuable uses and waste is eliminated or minimized.