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Econ Final
Final exam questions
| Question | Answer |
|---|---|
| What are things that everyone must have to survive? | Needs - Food, Water, Shelter, Clothing |
| What are things that people desire? | Wants - Cell phone, money, video games, brand new basketball shoes, etc |
| What is the definition of Economics? | The study of how we deal with limited resources. |
| What is the definition of Goods? | Things that we can see, touch, buy or sell. |
| What is a service? | Any work that a person does for others for money. |
| Which resource is basically unlimited? | The Sun (and oxygen if you are splitting hairs) |
| What are the factors of production? | Entrepreneur, Capital, Labor, Natural Resources |
| What is the definition of Labor? | Workers |
| What is the definition of Capital? | Money or human made items used to produce goods and services. |
| What is the definition of Natural Resources? | Something provided by nature that can be used in producing a good. |
| What is the definition of Scarcity? | Not enough of a certain resource to satisfy people’s needs and wants. |
| What are some things that an Entrepreneur do? | Invent and item to sell, Find a creative way to offer a good, Take risks of going into business, Create jobs |
| When producing and selling an item, what would need to be considered for a good or service to have a chance at success? | Is it a good idea? Is it a needed product? Is it created well? Is it sold at the right price? |
| If someone lacks the creativity or capital to get their idea "started", who could help them? | Consultants and investors |
| What is an opportunity cost? | Whatever is given up when a choice is made |
| What does Specialization do for a company? | It maximizes inventory and increases productivity. |
| What company was mentioned in class as the best company at "Specializing" in what it does? | In and Out Burger |
| What is Productivity? | The amount of goods and services produced by a worker or business in a given time period. |
| What items are often used or looked for to improve productivity? | Specialization, Capital, Technology, Education |
| When hiring, what types of education are employers looking for? | Mathematics, Problem Solving, Reading skills |
| What are the three types of economic systems? | Traditional, Command, Market |
| What questions to most economic systems ask? | What goods and services should be produced? How should those goods and services be produced? Who should get those goods and services? |
| What should be the ultimate goal for an economic system? | Produce a high standard of living for its citizens |
| The availability of what items would indicate a high standard of living? | Food, water, shelter, education, health care |
| What kind of economy would be one where people only satisfy basic needs and rarely care about gaining personal wealth? | Traditional |
| What kind of economy would be one where the government decides what would be produced and how it would be distributed. | Command |
| What kind of economy would be one where the buyers and sellers are powerful and make the decisions? | Market |
| What kind of economy would be one where the government has a hand in providing goods and services? | Mixed |
| What is usually true about a Market Economic System? | People are free to own their own property People are free to run any type of business People have economic freedom People are free to compete Businesses are allowed to make a profit |
| If an economy is strong,what is usually true? | In a strong economy, new and better goods are constantly being produced, in the most efficient way. Producing goods and services means that people have jobs. Jobs means that people have the ability to buy goods and services. |
| What is determined by the amount of goods or services that consumers are willing to buy at different prices? | Supply, Price, and Demand |
| Why are Willing and Able important when considering "Demand"? | People must be willing and able to purchase the item in order for it to be "IN DEMAND" |
| What is the law of Supply? | As prices rise, producers are willing to provide more of an item. |
| What is the law of Demand? | As prices rise, consumers are less willing to purchase an item. |
| What does the demand curve illustrate? | How much of an item people would be willing to purchase at any given price. |
| What are substitute goods? | Items that are interchangeable with each other. Coke or Pepsi for example. |
| What are complementary goods? | Items that are often used together. Turkey and Mashed Potatoes for example. |
| What are business owners allowed to make in a Market Economy? | A profit |
| What is the point where the supply curve and the demand curve meet? | Equilibrium |
| In a Market Economy, what do the supply and demand curves help set? | The price of goods and services |
| If demand for an item increases, which direction will the curve shift? | Right |
| If supply decreases, which direction does the curve shift? | Left |
| What occurs if the price of an item is set above the equilibrium price? | There will be a surplus |
| What occurs if the price of an item is set below the equilibrium price? | There will be a shortage |
| What happens if there is an increase in the cost of production? | Prices will go up |
| What do higher prices create for a producer? | An incentive to supply more goods |
| What does interchangeable mean? | That items can be used in place of each other |
| How much risk is involved in starting your own business? | A lot of risk! |
| Who sets the prices in a Market Economy? | Buyers and sellers, consumers and producers. Rarely does the government have a say in setting prices in a Market Economy. |
| What should happen if goods are sold at the equilibrium price? | Everything will be sold |
| When considering how to set prices, what are the factors of production that might alter in cost? | Natural Resources, Capital, Labor |
| How does income affect demand? | Something will not be in demand for a person that does not have money to purchase the item. Similarly, if a person makes the money to purchase the item, it might be something they are willing to purchase. |
| What would be a substitute for McDonalds? | Any burger location. |
| What would be a true substitute for a Coca Cola? | Any other cola product |
| How much of your deposit is a bank required to keep? | 10% |
| What might happen during a bank panic? | People will run to take out all of their money, resulting in a collapse of the bank or financial system. |
| What was set up to help put a stop to bank panics? | The Federal Reserve System |
| How many districts or main banks of the FED are there? | 12 |
| Who runs the FED? | The board of governors |
| What are the FEDs responsibilities? | Supervise Banks Clear Checks Control the Supply of Money Issue All Money |
| Are American citizens allowed to bank at the FED? | NOPE |
| What do Credit Unions offer? | A bank that is owned by the people who do their business there, they pay higher interest rates on accounts, they charge lower interest rates on loans |
| What is the purpose of the FDIC? | To insure deposits in case a bank fails |
| What does GDP measure? | The final goods and services produced in a country each year |
| What does GDP stand for? | Gross Domestic Product |
| What is also included in GDP? | Protection from crime and pollution |
| What does a n increase in GDP usually mean? | Businesses are doing well, people have jobs, consumers can spend more |
| What is considered to accurately judge how much GDP has increased? | Inflation |
| Once a business cycle hits the bottom, what will usually happen? | The economy expands, people are hired, consumers will be able to spend again |
| What factors will affect a business cycle? | Levels of investment, Supply of money and credit, Future predictions, Availability of Oil, Outbreak of War |
| What is inflation? | The average increase of the prices of goods and services. |
| What is used to compare how prices have changed over time? | Consumer Price Index or CPI |
| Who might be on a fixed income? | Those who are retired or can't work |
| What causes Demand Pull Inflation? | A scarcity in desired goods (houses for example) |
| What causes Cost Push Inflation? | Rising costs of important resources (oil for example) |
| For what reasons might inflation be seen as "healthy"? | It means people are working and spending money. The demand increases prices which is an incentive for producers to supply more products....which creates more jobs. |
| Who makes up the "Labor Force"? | People who are 16 or older, people who are working , and people who are looking for jobs. |
| What causes Cyclical Unemployment? | A slow down or a contraction in the business cycle (being laid off) |
| What causes Seasonal Unemployment? | Work slowing down due to restrictions in weather or the season (a life guard, ski instructor, construction worker) |
| What causes Structural Unemployment? | New skills are needed or technology has taken the place of the worker. |
| What causes Frictional Unemployment? | A person chooses not to work due to long commute, having to relocate, or they simply don't like their job. |
| What President declared war on poverty? | Lyndon Johnson |
| Whose job is it to enact Monetary policy? | The FED - They can raise interest rates to slow down the business cycle or lower interest rates to stimulate the business cycle. |
| Whose job is it to enact Fiscal policy? | The President and Congress - They can pass bills to spend more money or lower taxes to stimulate the business cycle or they can pass bills to reduce spending and raise taxes to slow down the business cycle. |
Created by:
Boone555
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