Download Econ Test Review

Civics-Economics
Test Review
Test Date 4/22/08
60 Questions/180 Points
The Basic Economic
Problem
 Scarcity
 All resources are scarce so all goods and
services are scarce.
Needs v. Wants
 Needs are things that you have to have
for survival.
 A want is anything else.
Goods v. Services
 Goods are physical and tangible objects.
 Services are actions or activities that a
person performs for another.
Factors of Production
 Land
 Labor
 Capital
Three Basic Economic
Questions
 What to produce?
 How to produce?
 For whom to produce?
Opportunity Cost
 The most desirable alternative to a
chosen activity.
 Production possibilities graph
 Efficiency
 Underutilization
 Guns or Butter Decision
Entrepreneur
 Risk-taker that starts a business.
Adam Smith
 Laissez-Faire
 Wealth of Nations
Economic Systems


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Traditional
Command
Market
Mixed
Law of Demand
 Consumers will buy more goods and
services at lower prices.
Law of Supply
 Producers will be willing to produce more
when they can charge higher prices.
Equilibrium
 Price where supply and demand are
equal (no shortage or surplus)
Disequilibrium
 Price where supply and demand are not
equal (creates a surplus or a shortage)
Business Organizations
 Sole Proprietorship
 Partnership
 Corporations (stock/dividends)
You should know the percentage each
organization represents as well as the
advantages and disadvantages.
Corporate Mergers
 Horizontal
 Vertical
 Conglomerate
Inflation




What is it?
Demand-pull
Cost-push
CPI and market basket
Gross Domestic Product
 What does it measure?
 Export
 Import
Unemployment

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

Structural
Frictional
Seasonal
Cyclical
 Underemployment
Business Cycle


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What is it?
Expansionary
Peak
Contractionary
Trough
What happens to GDP and unemployment
during each phase?
 Recession
 Stagflation
Monetary Policy





What is it?
Expansionary Purpose
Expansionary Tools
Contractionary Purpose
Contractionary Tools
Fiscal Policy





What is it?
Expansionary Purpose
Expansionary Tools
Contractionary Purpose
Contractionary Tools