Exam 1: Chapters 1-5 - Assignment Essays

question

Economy

answer

any organization that produces goods and services and then allocates them to people for use

question

Economics

answer

a social science that examines how people choose among the alternatives available to them

question

Macroeconomics

answer

the branch of economics that focuses on the impact of choices on the total, or aggregate, level of economic activity

question

Microeconomics

answer

the branch of economics that focuses on the choices made by consumers and firms and the impacts those choices have on individual markets

question

Opportunity Cost

answer

the value of the best alternative forgone in making any choice

question

Scarcity

answer

a condition in which people attempt to meet unlimited wants with limited resources

question

Thinking at the Margin

answer

to let the past go and to think forward to the next hour, day, year, or dollar that you expend in time or money

question

Trade-Offs

answer

budgeting inevitably involves sacrificing some of X to get more of Y

question

Efficient Production

answer

when an economy is operating on its production possibilities curve

question

Factors of Production

answer

the resources available to the economy for the production of goods and services

question

Financial Capital

answer

forms of funding including money and other "paper" assets (such as stocks and bonds) that represent claims on future payments

question

Production Possibilities Curve

answer

a graphical representation of the alternative combinations of goods and services an economy can produce

question

Gains from Exchange/Trade

answer

the net benefits to economic agents from being allowed an increase in voluntary trading with each other

question

Labor

answer

the human effort that can be applied to the production of goods and services

question

Technology

answer

knowledge that can be applied to the production of goods and services

question

Capital

answer

a factor of production that has been produced for use in the production of other goods and services

question

Economic Growth

answer

an increase in the productive ability of an economy, represents by outward shift in an economy's production possibilities curve

question

Inefficient Production

answer

situation in which the economy is using the same quantities of factors of production but is operating inside its production possibilities curve

question

Natural Resources

answer

the resources of nature that can be used for the production of goods and services

question

Entrepreneur

answer

a person who, operating within the context of a market economy, seeks to earn profits by finding new ways to organize the factors of production

question

Comparative Advantage

answer

in producing a good or service, the situation that occurs if the opportunity cost or producing that good or service is lower for that economy than for any other

question

Law of Increasing Opportunity Cost

answer

as an economy moves along its production possibilities curve in the direction of producing more of a particular good, the opportunity cost of additional units of that good will increase

question

Specialization

answer

situation in which an economy is producing the goods and services in which it has a comparative advantage

question

Demand

answer

an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service

question

Increase in Demand

answer

consumers plan to purchase more of the good at each possible price

question

Substitutes

answer

two goods for which an increase in price of one increases the demand for the other

question

Supply

answer

the total amount of a given product or service a supplier offers to consumers at a given period and a given price level

question

Increase in Supply

answer

an increase or decrease in the quantity supplied that is paired with a higher or lower supply price

question

Inputs

answer

the resources producers use to make goods and services

question

Surplus

answer

the amount by which the quantity demanded at the current price

question

Law of Demand

answer

for virtually all goods and services, a higher price leads to a reduction in quantity demanded, and a lower price leads to an increase in quantity demanded

question

Decrease in Demand

answer

consumers plan to purchase less of the good at each possible price

question

Normal Good

answer

a good for which demand increases when income increases

question

Law of Supply

answer

for most goods and services, a higher price leads to an increase in quantity supplied and a lower price leads to a decrease in quantity supplied

question

Decrease in Supply

answer

producers plan to sell less of the good at each possible price

question

Shortage

answer

a situation in which, at the prevailing price, quantity demanded is greater than quantity supplied

question

Quantity Demanded

answer

the quantity buyers are willing and able to buy of a good or service at a particular price during a particular period, all other things unchanged

question

Demand Shifter

answer

a variable that can change the quantity of a good or service demanded at each price

question

Inferior Good

answer

a good for which demand decreases when income increases

question

Quantity Supplied

answer

the quantity sellers are willing to sell of a good or service at a particular price during a particular period, all other things unchanged

question

Supply Shifter

answer

a variable that can change the quantity of a good or service supplied at each price

question

Expectations

answer

the forecasts or views that decision makers hold about future prices, sales, income, taxes, or other key variables

question

Change in Demand

answer

the shift in a demand curve

question

Complements

answer

two goods for which an increase in price of one reduces the demand for the other

question

Change in Quantity Demanded

answer

a movement along a demand curve that results from a change in price

question

Change in Supply

answer

a shift in the supply curve

question

Change in Quantity Supplied

answer

movement along the supply curve caused by a change in price

question

Equilibrium Quantity

answer

the quantity demanded and supplied at the equilibrium price

question

Equilibrium Price

answer

the price at which quantity demanded equals quantity supplied

question

Sole Proprietorship

answer

a firm owned by one individual

question

Corporation

answer

a firm owned by shareholders who own stock in the firm

question

Partnership

answer

a firm owned by several individuals

question

Corporate Stock

answer

shares in the ownership of a corporation

question

Stock Market

answer

the set of institutions in which shares of stock are bought and sold

question

Retained Earnings

answer

profits kept by a company

question

Dividends

answer

profits distributed to shareholders

question

Gross Domestic Product (GDP)

answer

the market value of all final goods and services produced in an economy in a given year

question

Government Purchases

answer

the sum of purchases of goods and services from firms by government agencies plus the total value of output produced by government agencies themselves during a time period

question

Intermediate Good

answer

a product used to produce a final good or finished product

question

Imports

answer

purchases of foreign-produced goods and services by a country's residents during a period

question

Value Added

answer

the amount by which the value of a firm's output exceeds the value of the goods and services the firm purchases from other firms

question

Expansion

answer

a sustained period in which real GDP is rising

question

Output Per Capita

answer

real GDP per person

question

Nominal GDP

answer

the total value of final goods and services for a particular period valued in terms of prices for that period

question

Investment

answer

consists of the additions to the nation's capital stock of buildings, equipment, software, and inventories during a year

question

Durables Goods

answer

goods that do not need to be purchased very often and typically last for at least three years

question

Exports

answer

sales of a country's goods and services to buyers in the rest of the world during a particular time period

question

Income

answer

the amount of money received during a given period of time by a person, household, or other economic unit in return for services provided or goods sold

question

Recession

answer

a sustained period in which real GDP is falling

question

Real GDP

answer

the total value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of changes in prices

question

Net Exports

answer

exports minus imports

question

Nondurables Goods

answer

any consumer goods in an economy that are either consumed in one use or used up over a short period of time

question

Trade Deficit

answer

negative net exports

question

GDP Deflator

answer

measures changes in the prices of goods and services produced in the US, including those exported to other countries

question

Peak

answer

the point of the business cycle at which an expansion ends and a recession begins

question

Consumption

answer

the use of goods and services by households

question

Final Good/Service

answer

a final product ready for sale that is used by the consumer to satisfy current wants or needs

question

Transfer Payment

answer

payments that do not require the recipient to produce a good or service in order to receive them

question

Trade Surplus

answer

positive net exports

question

Price Level

answer

the average level of prices in an economy

question

Trough

answer

the point of the business cycle at which a recession ends and an expansion begins

1 of 81

question

Economy

answer

any organization that produces goods and services and then allocates them to people for use

question

Economics

answer

a social science that examines how people choose among the alternatives available to them

question

Macroeconomics

answer

the branch of economics that focuses on the impact of choices on the total, or aggregate, level of economic activity

question

Microeconomics

answer

the branch of economics that focuses on the choices made by consumers and firms and the impacts those choices have on individual markets

question

Opportunity Cost

answer

the value of the best alternative forgone in making any choice

question

Scarcity

answer

a condition in which people attempt to meet unlimited wants with limited resources

question

Thinking at the Margin

answer

to let the past go and to think forward to the next hour, day, year, or dollar that you expend in time or money

question

Trade-Offs

answer

budgeting inevitably involves sacrificing some of X to get more of Y

question

Efficient Production

answer

when an economy is operating on its production possibilities curve

question

Factors of Production

answer

the resources available to the economy for the production of goods and services

question

Financial Capital

answer

forms of funding including money and other "paper" assets (such as stocks and bonds) that represent claims on future payments

question

Production Possibilities Curve

answer

a graphical representation of the alternative combinations of goods and services an economy can produce

question

Gains from Exchange/Trade

answer

the net benefits to economic agents from being allowed an increase in voluntary trading with each other

question

Labor

answer

the human effort that can be applied to the production of goods and services

question

Technology

answer

knowledge that can be applied to the production of goods and services

question

Capital

answer

a factor of production that has been produced for use in the production of other goods and services

question

Economic Growth

answer

an increase in the productive ability of an economy, represents by outward shift in an economy's production possibilities curve

question

Inefficient Production

answer

situation in which the economy is using the same quantities of factors of production but is operating inside its production possibilities curve

question

Natural Resources

answer

the resources of nature that can be used for the production of goods and services

question

Entrepreneur

answer

a person who, operating within the context of a market economy, seeks to earn profits by finding new ways to organize the factors of production

question

Comparative Advantage

answer

in producing a good or service, the situation that occurs if the opportunity cost or producing that good or service is lower for that economy than for any other

question

Law of Increasing Opportunity Cost

answer

as an economy moves along its production possibilities curve in the direction of producing more of a particular good, the opportunity cost of additional units of that good will increase

question

Specialization

answer

situation in which an economy is producing the goods and services in which it has a comparative advantage

question

Demand

answer

an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service

question

Increase in Demand

answer

consumers plan to purchase more of the good at each possible price

question

Substitutes

answer

two goods for which an increase in price of one increases the demand for the other

question

Supply

answer

the total amount of a given product or service a supplier offers to consumers at a given period and a given price level

question

Increase in Supply

answer

an increase or decrease in the quantity supplied that is paired with a higher or lower supply price

question

Inputs

answer

the resources producers use to make goods and services

question

Surplus

answer

the amount by which the quantity demanded at the current price

question

Law of Demand

answer

for virtually all goods and services, a higher price leads to a reduction in quantity demanded, and a lower price leads to an increase in quantity demanded

question

Decrease in Demand

answer

consumers plan to purchase less of the good at each possible price

question

Normal Good

answer

a good for which demand increases when income increases

question

Law of Supply

answer

for most goods and services, a higher price leads to an increase in quantity supplied and a lower price leads to a decrease in quantity supplied

question

Decrease in Supply

answer

producers plan to sell less of the good at each possible price

question

Shortage

answer

a situation in which, at the prevailing price, quantity demanded is greater than quantity supplied

question

Quantity Demanded

answer

the quantity buyers are willing and able to buy of a good or service at a particular price during a particular period, all other things unchanged

question

Demand Shifter

answer

a variable that can change the quantity of a good or service demanded at each price

question

Inferior Good

answer

a good for which demand decreases when income increases

question

Quantity Supplied

answer

the quantity sellers are willing to sell of a good or service at a particular price during a particular period, all other things unchanged

question

Supply Shifter

answer

a variable that can change the quantity of a good or service supplied at each price

question

Expectations

answer

the forecasts or views that decision makers hold about future prices, sales, income, taxes, or other key variables

question

Change in Demand

answer

the shift in a demand curve

question

Complements

answer

two goods for which an increase in price of one reduces the demand for the other

question

Change in Quantity Demanded

answer

a movement along a demand curve that results from a change in price

question

Change in Supply

answer

a shift in the supply curve

question

Change in Quantity Supplied

answer

movement along the supply curve caused by a change in price

question

Equilibrium Quantity

answer

the quantity demanded and supplied at the equilibrium price

question

Equilibrium Price

answer

the price at which quantity demanded equals quantity supplied

question

Sole Proprietorship

answer

a firm owned by one individual

question

Corporation

answer

a firm owned by shareholders who own stock in the firm

question

Partnership

answer

a firm owned by several individuals

question

Corporate Stock

answer

shares in the ownership of a corporation

question

Stock Market

answer

the set of institutions in which shares of stock are bought and sold

question

Retained Earnings

answer

profits kept by a company

question

Dividends

answer

profits distributed to shareholders

question

Gross Domestic Product (GDP)

answer

the market value of all final goods and services produced in an economy in a given year

question

Government Purchases

answer

the sum of purchases of goods and services from firms by government agencies plus the total value of output produced by government agencies themselves during a time period

question

Intermediate Good

answer

a product used to produce a final good or finished product

question

Imports

answer

purchases of foreign-produced goods and services by a country's residents during a period

question

Value Added

answer

the amount by which the value of a firm's output exceeds the value of the goods and services the firm purchases from other firms

question

Expansion

answer

a sustained period in which real GDP is rising

question

Output Per Capita

answer

real GDP per person

question

Nominal GDP

answer

the total value of final goods and services for a particular period valued in terms of prices for that period

question

Investment

answer

consists of the additions to the nation's capital stock of buildings, equipment, software, and inventories during a year

question

Durables Goods

answer

goods that do not need to be purchased very often and typically last for at least three years

question

Exports

answer

sales of a country's goods and services to buyers in the rest of the world during a particular time period

question

Income

answer

the amount of money received during a given period of time by a person, household, or other economic unit in return for services provided or goods sold

question

Recession

answer

a sustained period in which real GDP is falling

question

Real GDP

answer

the total value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of changes in prices

question

Net Exports

answer

exports minus imports

question

Nondurables Goods

answer

any consumer goods in an economy that are either consumed in one use or used up over a short period of time

question

Trade Deficit

answer

negative net exports

question

GDP Deflator

answer

measures changes in the prices of goods and services produced in the US, including those exported to other countries

question

Peak

answer

the point of the business cycle at which an expansion ends and a recession begins

question

Consumption

answer

the use of goods and services by households

question

Final Good/Service

answer

a final product ready for sale that is used by the consumer to satisfy current wants or needs

question

Transfer Payment

answer

payments that do not require the recipient to produce a good or service in order to receive them

question

Trade Surplus

answer

positive net exports

question

Price Level

answer

the average level of prices in an economy

question

Trough

answer

the point of the business cycle at which a recession ends and an expansion begins

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