Gov

  1. Define Opportunity Cost?- The next best alternative given up as a result of a decision. 

Use the image below to answer question 2.

 

  1. What is the opportunity cost of moving from point X to Y.

-2 apples

+2 peaches

  1. What are the three major economic systems in the world? Give countries for each one. Traditional, command and market. Example: African Mbuti, Cuba, Australia

  1. What is the major problem that all societies face? scarcity

  1. Identify the 3 major economic questions.What, How, for Whom

  1. List the 4 factors of production. Examples for each land labor entrepreneur and capital 

  1. What do low prices signal buyers to do? Buy more

Use the graph below to answer questions 8 and 9.

  1.  What could have caused the change in demand for typewriters above? People are using computers and instead of type writers

  1. What happened to the equilibrium price and quantity of typewriters? They went down 

Use the graph below to answer question 10.

  1.  What could have caused the shift above? The resource price decreases 

  1. Explain the following acronym and how it relates to a change in demand:

    1. M- market size (#of consumers)

    2. E- future expectations

    3. R- related goods (sub/complements)

    4. I- consumer income (normal inferior)

    5. T- tastes and preferences 

  1. Explain the following acronym and how it relates to a change in supply:

    1. R- resource cost

    2. O- opportunity cost of alternative production

    3. T- taxes and subsides(government action)

    4. T-technology 

    5. E- future expectations 

    6. N- number of sellers 

 

  1.  High prices are a signal for producers to produce more 

  1.  If there is a surplus of goods in the market, what needs to happen to prices? Prices must decrease 

  1.  Explain collective bargaining.When labor and management agree to mediation, a neutral person helps settle the dispute

  1. When people live on a fixed income (I.e. minimum wage, Social Security) how does inflation affect them? They won't be able to buy much 

  1. Explain the difference between a stock and a bond. A bond is lending the company a loan. A stock is a share of ownership in a company (you're a shareholder)

  1. Define the following:

    1. Multinational- is a firm that sells and produces products in multiple countries

    2. Conglomerate- is a firm made up of many unrelated divisions or subsidiaries. Own more than 3 companies under the same heading 

    3. Vertical merger- companies at different stages of supply chain 

    4. Horizontal merger- companies in the same industry 

  1.  What are some examples of nonprofit organizations?Ex. Schools, churches, hospitals

  1. Explain the advantages and disadvantages of forming a corporation.

Advantages- No personal risk to entrepreneurs private assets, Ease of raising start-up capital by selling stock, Decisions made by board of directors, pays less taxes 

Disadvantages- Complicated to set up , Costly to establish, More government regulation, Double taxation= profits and dividends

Use the chart below to answer question 21.

 

  1. According to the chart above, which of the following is the riskiest investment that can give you the highest return?stocks

  1. What is the purpose of the FDIC? To protect your deposit in a bank in case the bank fails, insure 250,00 dollars. 

  1.  List and explain the 3 functions of money and its characteristics.A Medium of Exchange-Money can easily be used to buy goods and services by all parties. A Measure of Value-Money measures the value of all goods and services.  Money acts as a measurement of value or worth 1 goat = $50 = 5 chickens OR 1 chicken = $10. A Store of Value- Money allows you to store purchasing power for the future, Money doesn’t die or spoil

  1. Explain the difference between fiat money and commodity money. Commodity Money-Tea, tobacco and other crops was used as a medium of exchange.Fiat Money-Anything that is declared money by government decree. It has no intrinsic value!!

  1.  Money loses its value when what happens inflation, because there is too much of it in the system 

  1. What is the difference between mandatory spending and discretionary spending?mandatory spending- are regulated by law Discretionary spending- is optional 

  2. Where do local governments spend the most money?Education

  1. The federal government gets most of its revenue from individual income taxes

  1. Where do states get most of their revenue from? Intergovernmental revenue from the fed 

  1. What are the 4 sectors of the economy?consumer, government; invest, export

  1. What is the largest sector of our economy?C- the consumer 

  1. Write down the output expenditure model.

C + G + I + (X-M) = GDP

  1. Explain the difference between real and nominal GDP.When GDP is not adjusted to remove the effects of inflation it is called Nominal GDP, When GDP is adjusted to the distortions of inflation, it is called real GDP 

  1. Who is included in the unemployment rate?people who are currently unemployed but are looking for a job between the ages of 16-65

  1. Define inflation. The rate in which prices go up over time 

  1. Explain the following types of unemployment:

    1. Structural- A reduction in demand for workers due to a fundamental change in the operations of the economy(out of work for a week or 2 doesn't change anything)

    2. Cyclical- Unemployment from a low level of aggregate demand caused by swings in the business cycle.People who lose their job Due to the demand of the market 

    3. Frictional- People who are temporarily between jobs, they suffer little economic hardship from their lack of employment.when you lose your job due to the opportunity of the job change. (moved job to another location or dont have the skills)

  1. Why is Gross Domestic Product important? It tells you the market how mature you country has made over the course of a year

  1. Draw the business cycle:

  1.  Who is included in the unemployment rate 16 that is looking for a job 

  1.  When the overall price level is increasing, the economy is experiencing. Save

  1. When our economy is in a recession, what types of unemployment is our economy experiencing? Structural and frictional 

  1.  The most important measure of a country’s economy is the real 

  1.  An example of discretionary spending would be spending on Entertainments 

Use the model below to answer questions 48 and 49.

  1.  What does the wavy line represent? GDP

  1. When the business cycle enters into the peak, what does it enter into next? Recession

  1.  Where does the federal government get most of its revenue from? Savings account 

  1. Define a Liquid investment- a state of matter that flows, has a definite volume but no fixed shape

  1. Which of the following is the ideal interest rate when looking for an investment? 4-6%

  1. When looking at yearly inflation rate, what is the goal for the United States? 1-2%

  1. Who insures your bank deposits for up $250,000?The FDIC

  1. Nike would be an example of a Corporation

  1. What is the cost of borrowing money?interest rate