Economics Final Exam Review Sheet Answers
1. Not having enough of something to satisfy all of our needs
and wants.
2. Because there will always be competing uses for resources.
3. The study of how individuals, families, businesses, and
societies use limited resources to fulfilled their unlimited
wants.
4. Problem, Alternatives, Criteria, Evaluate, Decision. Why
do you have to make a choice? What are the possible
options? What makes one option better than another?
How well does each option meet the criteria? Make the
decision—which one has the most favorable trade-offs?
5. Exchanging one thing for use of another.
6. The value of the next best alternative that had to be given
up to do the action that was chosen.
7. Used to show the maximum combinations of goods and
services that can be produced from a fixed amount of
resources in a given period of time.
8. What is left from a company’s receipts after all expenses
have been paid.
9. Resources needed to produce goods and services.
10.
Natural resources present without human
intervention. Animals, diamonds.
11.
The work people do, anyone who works to produce
goods and services.
12.
The manufactured goods used to make other goods
and services.
13.
The ability of individuals to start new businesses, to
introduce new products and processes and improve
management techniques.
14.
The ability to produce greater quantities of goods and
services in better and faster ways.
15.
A way of determining how to use resources to satisfy
people’s wants and needs.
16.
Answers the 3 basic questions according to tradition;
things are done the way they have always been done.
17.
The individual has little, if any, influence over how
the basic economic questions are answered. Government
leaders control the factors of production and make all
decisions about their use.
18.
Economic decisions are not made by the government,
but by individuals looking out for their own and their
families’ best interests.
19.
A voluntary exchange of goods and services between
buyers and sellers.
20.
As signals to everyone within the system as to what
should be bought and what should be produced.
21.
Combines basic elements of a pure market economy
and a command economy. Most countries have a mixed
economy. Private ownership of property and individual
decision making combine with government interventions
and regulations.
22.
The desire, ability and willingness to purchase a good
or service.
23.
Consumer’s
24.
As the price of an item goes down, demand increases;
as the price of an item goes up, demand decreases.
25.
The desire, ability, and willingness to sell a good or
service to people.
26.
Producer’s
27.
As the price of an item goes up, supply increases; as
the price of an item goes down, supply decreases.
28.
The point at which supply and demand are equal.
29.
Large inventories of goods; above the equilibrium
point; suppliers produced more than consumers demanded
or wanted.
30.
The quantity demanded is greater than the quantity
supplied.
31.
A government set minimum price that can be charged
for goods and services.
32.
A government set maximum price that can be charged
for goods and services.
33.
Perfect competition, monopolistic competition,
oligopoly, pure monopoly.
34.
Price
35.
Quantity
36.
The amount that it costs to create the product you are
trying to sell.
37.
Prices or costs that do not generally change.
38.
Prices or costs that change easily and often.
39.
The minimum amount required by the entrepreneur
to continue in a business.
40.
Sole proprietorship, partnership, corporation
41.
Easy to start, make all decisions, receive all the
profits. Have to provide all the capital, must pay all the
bills, hire employees and work long hours, if it fails—they
are wholly responsible.
42.
Easier to financing, share the workload and duties,
share financial responsibility. May have disagreements
about the business, if a partner makes a mistake or is
dishonest, it may put the business in jeopardy.
43.
Easier to finance growth b/c of sell of stocks and
bonds, limited financial responsibility b/c stockholders can
only lose their investment. Extensive government
regulations and may be harder to reach agreements
between owners.
44.
An organization that does not distribute its surplus
funds to owners or shareholders, but instead uses them to
help pursue its goals.
45.
Frictional—normal job switching in a dynamic
economy. Structural—a jobs-skills mismatch due to
changes in technology. Cyclical—movements in the
business cycle (lay-offs and hirings) Seasonal—jobs that
are dependent on weather or seasonal goods.
46.
Gross Domestic Product—the total market value of all
final goods and services produced within the borders of a
country in a year.
47.
Consumer Price Index, based on a basket of goods and
services purchased by typical consumers with a base
period of 1982-4.
48.
Goods and services that can be used by many people
at the same time without reducing the benefit of each
person. Provided and maintained by the government.
49.
Goods and services provided by businesses and sold
to consumers.
50.
Taking income from some people through taxation
and using it to assist those in need.
51.
When the governments expenses are greater than its
receipts.
52.
Government overspending
53.
Public debt, the total amount of outstanding debt for
the federal government at any given time.
54.
When the amount of government receipts is greater
than its expenses over one fiscal year.
55.
The % of the civilian labor force without jobs but
actively seeking work.
56.
Caused by government policy, e.g. the minimum wage
law—would hire more people if they could pay them less
money.
57.
When the unemployment rate is less than 5%.
58.
Prices rise as a result of excessive business and
consumer demand.
59.
Says that wage demands of labor unions and the
excessive profit motive of large corporations push up
prices.
60.
The federal government’s use of taxation and
spending policies to affect overall business activity.
61.
The continuous sequence of ups and downs in the
economy.
62.
Economic growth
63.
Increase in prices
64.
Decline in business activity
65.
A recession that continues for a long period of time.
66.
Period of prosperity—highest point
67.
The part of the business cycle in which economic
activity is slowing down.
68.
The lowest part of the business cycle in which the
downward spiral of the economy levels off.
69.
The trading of items people have for the items they
need or want.
70.
Medium of exchange, unit of accounting and store of
value.
71.
Accepted, stable, portable, scarce, divisible, durable.
72.
You deposit money into the account and you can write
a check to a business or person and it can be taken to the
bank and that business or person will receive money. You
cannot use more than what is in your account without
facing fees.
73.
It electronically deducts money from your account
when you use the card. The money comes out of your
checking account and if there is not money in your
account, you cannot use the card.
74.
You are charged an APR or annual percentage rate
divided out each month. You have a credit limit and you
must pay back a certain amount of the money you spent
each month.
75.
When someone is using your name and other personal
information to take out loans, buy things, use credit cards,
etc.
76.
The central bank of the United States; incorporates 12
Federal Reserve branch banks and all national banks and
state-chartered commercial banks and some trust
companies) "the Fed seeks to control the United States
economy by raising and lowering short-term interest rates
and the money supply"
77.
The same % of taxes is taken no matter what an
person’s level of income. i.e. sales tax
78.
The % of tax deducted increases as the person’s
income increases. i.e. income tax.
79.
Goods brought into your country
80.
Goods leaving your country
81.
North American Free Trade Agreement. Reduced and
then eliminated tariffs between the U.S., Canada and
Mexico. Signed in 1992.
82.
A tax on imports
83.
Put in place to limit trade (usually done by a country
to protect the interests of businesses and companies in
their country). i.e. tariffs, import quotas, voluntary trade
restrictions.
84.
When one country can produce an item more cheaply
and efficiently than another country.
85.
Occurs when a country can produce an item more
cheaply, but not necessarily more efficiently.
86.
The Federal Deposit Insurance Corporation. Protects
a depositor’s money up to $100,000.
87.
The theory that deals with the relationship between
the amount of money the Federal Reserve places in
circulation and the level of activity in the economy.
88.
Saving is what people usually do to meet their short
term goals. Makes you a small amount of interest.
Investing is usually done for longer term goals and usually
results in making larger amounts of money than just
savings would.
89.
Savings account, Certificates of Deposit (CD’s), Bonds
(Govt., Corp., & municipal), stocks, and mutual funds.
90.
Or score. It is used to determine whether or not a
person is a good credit risk and it is based on the 4 C’s of
credit.
91.
Profit sharing by a company with its stockholders.
92.
When stock prices continue to rise over an extended
period of time.
93.
Opposite of bull, it is when stock prices continue to
fall over an extended period of time.
94.
Setting SMART financial goals, analyzing
information, forming a plan or a budget, implementing the
plan/budget and monitoring and modifying the
plan/budget.
95.
Specific, Measurable, Attainable, Realistic, Time
bound.
96.
Collateral-what lenders can take from you if you don’t
repay your loan. Capital-personal items of value.
Capacity-are you going to be able to pay back the loan, this
is where work history and income come into play.
Character-are you a trustworthy person? They look at
your credit history. Do you pay your bills and on time?
97.
GOOD: Convenience—easier than carrying around a
big wad of cash. Protection- easier to get a refund-helps to
eliminate fraud. Credit cards don’t hold you responsible if
someone steals your card—cash is just gone. Emergency
expenses—always a way to pay for them—car breaks down.
Builds Credit—easier to get credit later—like when buying
a house. Quicker Gratification—helps you to buy a house
or car without having to wait until you have enough
money to purchase it. Special Offers—reduced interest
rates or interest rates for a period of time, 5% off total
purchases, coupons, etc. Bonuses—frequent flyer miles or
cash back. BAD: Interest—charges you more than what
you would have paid if you had the cash to buy the item.
Overspending-living beyond your means, treating it like
extra income. Debt—creditors can claim future income if
you do not repay your debts. Identity Theft-credit makes it
easier for people to steal your personal information and
for them to open up credit card accounts or get loans with
your information.
98.
A means of guaranteeing your financial protection
against various risks. It is helpful in that it will not leave
you financial devastated if your house burns down, there is
a hurricane or a car accident.
99.
A job provides you with the basics—cash and a way to
earn it. A job may not make you want to get up and go to
work, take deep interest in your work or provide you with
fulfillment. A career is your chosen occupation. It also
provides income and an activity, but also provides
challenges, opportunities for advancement and real
satisfaction with what you do.
100.
Shows how you long it will take you to double your
money by taking 72 ÷ by the interest rate. Examples: 72 ÷
6% = 12 years. 72 ÷ 9% = 8 years.