SMCHS-Economics Topic 2 Test

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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.


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