Economics Key Concepts: Scarcity, Trade, Markets, and Externalities

Which of the following is not one of the basic economic questions that people in all economies must answer?

How will resources be used to eliminate scarcity?

People who create goods and services are most commonly called

producers

In an economy mostly relying on central planning, the country's economy is most likely considered

command

People make voluntary exchanges of goods and services in a free market MAINLY because

they expect to be better off as a result of an exchange

Economists would agree that specialization generally leads to

economic interdependence

Consumers are LEAST likely to be defined as

people that supply goods and services

The Tragedy of the Commons refers to

the abuse of resources that belong to everyone

Exports are best described as

goods that have been sold to consumers in other countries

Tariffs or quotas on imports are most likely to cause

increases in consumer spending

In economics, specialization occurs on an international level when

countries invest in the production of goods they are best able to produce

An economist would argue that according to the principle of comparative advantage, a country should generally

focus productive resources on what it does best

Since the year 2000, China has experienced a(n)_______________ in annual GDP.

increase

One of the benefits of trade barriers is that

they may help a nation's newest industries develop successfully

The economic term SCARCITY is most often used to refer to

the condition of limited resources and unlimited wants

Which of the following provides the best example of people using the barter system?

A grocery store owner trades a case of pineapples for two cases of oranges

China's prosperity in recent years is most likely the result of

a shift to a market-based economy

A political leader would most likely support a policy to impose a quota on imports as a way to

protect domestic producers

Which of the following statements about trade barriers is most likely true?

They often impose more costs than benefits

Scarcity means that,

an inequality exists between wants and the resources available to satisfy them

A change in quantity supplied is shown as,

a movement along the supply curve

Which of the following statements is true of a pure market economy?

There is no central planning agency that determines prices

The market-clearing price represents,

the consumers willing and able to buy and the producers willing to supply at that price

The concept of economic scarcity refers mainly to

decisions about how resources are allocated

Which of the following could be used in a system of voluntary exchange?

all of the above

Which of the following are examples of policies that affect international trade?

all of the above

If the price of root beer increases,

the demand curve for root beer floats will shift to the left

What would an increase in taxes of a producer do to the position of the supply curve?

it would shift to the left

International trade restrictions are often created to

protect domestic industries from foreign competition

Which of the following is an inelastic good?

all of the above

Which of the following can be a cost or a benefit to someone other than who decides how much to produce or consume?

externality

Which of the following is not considered a trade barrier?

specialized goods

The government of Country B imposes quotas on bananas imported into Country B. Which of these groups is MOST likely to benefit from these quotas in the short run?

domestic banana producers

If the price of Coca-Cola increases,

people will buy more Pepsi

Embargoes, quotas, and tariffs tend to

inhibit the voluntary exchange of goods between nations

Public goods are,

non-excludable

Which of the following is considered a demand deposit?

checking account

This is a financial institution that accepts deposits and makes loans.

all of the above

Which of the following is a public good?

local police providing security

Which of the following is an example of the government taking advantage of a positive externality?

government subsidy for vaccine development

National defense is non-excludable because,

it is available to all citizens

Reserve ratios are used to determine,

how much a bank is able to lend versus the amount on deposit

Which of the following is NOT a function of the Fed?

regulating the amount of income tax collected

Lending institutions are able to add to the money supply by,

making loans

Governments intervene in markets to,

all of the above

Which type of retirement account would you invest in if your employer offered it as a benefit?

401k

Why would a potential investor open a brokerage account?

to buy stocks

What is the primary function of the Fed?

to regulate the money supply

Which is NOT a function of money?

barter

If two countries traded in their comparative advantage they would

specialize in goods they can make at a lower opportunity cost than the other country