Untitled Flashcards Set

Unit 1 

How do individuals satisfy their wants and needs? 

-through the exchange of goods and services  

What is the term that describes the condition where people's wants are greater than the available resources? 

-Scarcity  

What is meant by "scarcity" in economic terms  

-The situation where desires exceed the available resources  

Which of the following best illustrates the concept of scarcity? 

-A concert selling out of $25 tickets  

What does a point inside the production possibilities frontier indicate  

-underutilization of resources  

Why is a production possibilities curve useful to economists  

-it illustrates opportunity costs and efficiency  

What does it mean to think on the margin  

-evaluating the impact of adding or subtracting one unit of a decision  

What is the marginal cost in the concept of decision making  

-the extra cost of adding one unit of a decision  

If a farmer decides to plant broccoli instead of squash what is the opportunity cost 

-the chance to plant squash if it is more affordable  

How does thinking at the margin affect decision making 

-it allows for a comparison of additional benefits and costs  

Unit 2  

How is gross domestic product (GDP) used to monitor the business cycle  

-GDP indicates whether the nation's economy is expanding or contracting  

An entrepreneur can best be characterized as someone who  

-takes risks in order to acquire profits 

Which basic economic goal is most easily achieved in a traditional economy  

-Equity  

When does market failure occur  

-When free markets fail to distribute resources efficiently 

Key advantages of free market economic systems include  

-Economic efficiency, economic freedom, economic growth, and variety of goods  

Private property ownership and some government regulation of the economy are basic characteristics of which economic system 

-Mixed economy  

Which of the following is an explanation of what Adam Smith Called the "Invisible hand" of the market place  

-Self-interest, competition, and incentives promote smoothly running markets  

What is a disadvantage of central planning  

-Lack of economic efficiency  

If a student volunteers at a food pantry on Fridays after school, which of the following might be a negative externality  

-The student's parents have to drive her to the food pantry  

Which of these is an example of restrictions that government places on the use of business property  

-zoning laws  

Unit 3  

What would likely cause a shift in the entire demand curve  

-a change in the price of the good 

What does the income effect describe  

-the relationship between income levels and product preferences  

What is the relationship between substitute goods  

-an increase in the price of one increases demand for the other  

How does the expectation of a future price increase typically affect current demand  

-it increases current demand  

What is a "normal good" in economics 

-a good whose demand increases as income increases 

in economic terms "demand" usually refers to  

-the willingness and ability to purchase a good at various prices  

When the price of a good changes, what happens to the demand curve  

-we move long the existing curve 

What is considered unitary elastic demand  

-when elasticity equals 1 

Which of the following factors does not typically affect the elasticity of demand  

-the color of the product  

What is the primary measure of elasticity of demand  

-the percentage change in quantity demanded divided by the percentage change in price   

According to the law of supply, what happens when the price of a good increases  

-producers will offer more of the good 

What remains constant in a supply schedule for a specific good  

-other factors affecting production costs  

What is the impact of a new oil discovery on the supply of oil to the U.S. market  

-it increases the supply and shifts the supply curve to the right  

What role does technology play in input costs and supply  

-it decreases production costs and increases supply  

How does a decrease in the cost of raw materials affect supply  

-supply increases at all price levels  

How do rising prices affect new firms considering entering a market  

-they encourage new firms to enter the market to earn profits  

If the price of pizza rises and the cost of making pizza stays the same, what will likely happen  

-the pizzeria will earn higher profits to produce more pizza 

What does term 'marginal revenue' refer to 

-the additional income from selling one more unit of a good  

What are variable costs  

-costs that rise or fall depending on the quantity produced 

How can a firm determine the most profitable level of output  

-by finding the output level where marginal revenue equals marginal cost  

What is a price floor  

-minimum price set by the government  

When a new fad causes a rapid increase in demand, what initially happens in the market  

-a shortage occurs as demand exceeds supply  

What is the consequence of setting a minimum wage above the equilibrium wage  

-surplus of labor  

How do firms typically respond to a shortage in the market  

-by increasing prices to balance demand and supply  

What is the effect of a government imposed tax on car manufacturers on the supply curve  

-the supply curve shifts to the left decreasing supply  

What does a surplus in the market indicate  

-supply exceeds demand  

What might cause a pizzeria owner to throw out many slices of pizza at the end of the day 

-surplus  

What is the effect of a price ceiling set below the equilibrium price  

-shortage of goods  

Which factor is a non-price determinant that can shift the demand curve  

-consumer expectations  

What does a rightward shift in the demand curve indicate  

-an increase in consumer demand for the product  

Personal Finance  

What is the potential consequence of credit card abuse  

-struggling to pay balances  

What feature is unique to free checking accounts  

-higher interest rates on deposites  

Why is it important to start thinking about budgeting and saving now  

-it prepares you for financial independence after high school  

Why might someone choose a checking account with overdraft protection  

-to avoid fees for writing checks without sufficient funds  

What is the primary purpose of a personal budget  

-to track how you spend your money  

Why should you focus on wants when cutting expenses  

-wants are less important than needs  

What is the advantage of using a certificate of deposit (CD) for savings  

-generally higher interest rates than regular saving accounts  

How can federal student loans be beneficial  

-they have a fixed interest rate  

What is a secured loan  

-a loan backed by an asset  

What is the primary advantage of mutual funds  

-they provide instant diversification  

What is the main advantage of using a credit card responsibly  

-building a strong credit history  

What is the potential benefit of investing in stocks compared to bonds  

-stocks have historically offered higher returns  

Which of the following is a characteristic of compound interest  

-interest on top of interest  

What is a potential consequence of having a low credit score  

-higher interest rates on loans  

What is a recommended amount for an emergency fund  

-three to six months of income  

What does the time value of money principle suggest  

-money grows through compound interest  

Why is auto insurance often required by law  

-to ensure all drivers have financial protection against accidents  

What is the purpose of life insurance  

-to provide a set amount to a beneficiary in case of death  

How can a policy holder lower their insurance costs 

-by increasing deductibles 

What does actual cash value (ACV)mean in terms of insurance coverage 

-it insures belongings for their depreciated value  

What is a deducible in the context of insurance  

-the amount you pay before the insurance company covers the loss  

Which coverage would help if your car is stolen  

-comprehensive  

How do insurance companies reduce their costs  

-by requiring policyholders to pay copays and deductibles  

What does a deductible represent in an insurance policy  

-the portion you pay before insurance pays  

What is the role of a policy in insurance terms  

-a legal document outlining coverage terms  

What type of coverage pays for damage to your car regadless of fault 

-collision  

What is the primary purpose of the federal trade commission (FTC) concerning consumer protection  

-to protect consumers against fraud and unfair business practices  

What is a common rule of thumb for rent and utility payments  

-they should not exceed one weeks take home pay  

Which is a benefit of buying a used car over a new car 

-lower insurance costs  

Why is budgeting important when planning a major purchase like a car or home  

-to ensure you can afford the purchase without financial strain  

Why is it important to complete the FAFSA form  

-to be considered for federal student aid such as grants and loans  

How can you protect yourself from identity theft  

-using strong passwords and being cautious with personal information  

Why might leasing a car be more appealing than buying one  

-avoiding a long term financial commitment  

How do online shopping sites secure experience  

-by using encrypted payment process and secure websites  

What is the main purpose of renters insurance  

-to insure against theft or damage to your personal property  

What is the main advantage of a fixed-rate mortgage  

-payments remain the same over the life of the loan  

Personal finance test (answers I got wrong on the test) 

Which of the following is true of buying a stock by using a "limit" buy option  

-you can choose whatever price you want to purchase the stock at  

What is simple interest  

-interest rate that is given for taking out a loan that is paid on top of the principal balance owed  

What is the primary purpose of a credit report  

-to evaluate your financial risk to lenders  

What type of tax is a Social Security tax considered  

-payroll tax 

People have two options when looking for places to live. Rent or buy. Which of the following statements is true about the cost-benefit analysis that goes into deciding where to live  

-when owning a home you know that the value of your property could go down  

Macroeconomics  

-How many federal reserve districts are there in the united states  

-12 

What is the purpose of the federal open market committee (FOMC) 

-to make key monetary policy decisions about interest rates and money supply  

Which of the following is NOT one of the characteristic of money  

-unlimited supply  

-what happens if there is too much fiat money in circulation  

-it can lead to inflation  

What is the primary role of the Federal Reserve System  

-to manage the united states monetary policy  

How does the Federal Reserve regulate the nations money supply  

-by setting the discount rate, reserve requirements, and using open market operations  

How does money functions as a unit of account  

-it provides a way to compare value of goods and services  

What is the main reason money is considered a store of value  

-it maintains its value over time unless affected by inflation  

Which of the following is NOT one of the three uses of money according to economics  

-source of income  

What is one function of the federal reserve system in serving the federal government  

-processing all checks the government writes 

 Unit 1 

How do individuals satisfy their wants and needs? 

-through the exchange of goods and services  

What is the term that describes the condition where people's wants are greater than the available resources? 

-Scarcity  

What is meant by "scarcity" in economic terms  

-The situation where desires exceed the available resources  

Which of the following best illustrates the concept of scarcity? 

-A concert selling out of $25 tickets  

What does a point inside the production possibilities frontier indicate  

-underutilization of resources  

Why is a production possibilities curve useful to economists  

-it illustrates opportunity costs and efficiency  

What does it mean to think on the margin  

-evaluating the impact of adding or subtracting one unit of a decision  

What is the marginal cost in the concept of decision making  

-the extra cost of adding one unit of a decision  

If a farmer decides to plant broccoli instead of squash what is the opportunity cost 

-the chance to plant squash if it is more affordable  

How does thinking at the margin affect decision making 

-it allows for a comparison of additional benefits and costs  

Unit 2  

How is gross domestic product (GDP) used to monitor the business cycle  

-GDP indicates whether the nation's economy is expanding or contracting  

An entrepreneur can best be characterized as someone who  

-takes risks in order to acquire profits 

Which basic economic goal is most easily achieved in a traditional economy  

-Equity  

When does market failure occur  

-When free markets fail to distribute resources efficiently 

Key advantages of free market economic systems include  

-Economic efficiency, economic freedom, economic growth, and variety of goods  

Private property ownership and some government regulation of the economy are basic characteristics of which economic system 

-Mixed economy  

Which of the following is an explanation of what Adam Smith Called the "Invisible hand" of the market place  

-Self-interest, competition, and incentives promote smoothly running markets  

What is a disadvantage of central planning  

-Lack of economic efficiency  

If a student volunteers at a food pantry on Fridays after school, which of the following might be a negative externality  

-The student's parents have to drive her to the food pantry  

Which of these is an example of restrictions that government places on the use of business property  

-zoning laws  

Unit 3  

What would likely cause a shift in the entire demand curve  

-a change in the price of the good 

What does the income effect describe  

-the relationship between income levels and product preferences  

What is the relationship between substitute goods  

-an increase in the price of one increases demand for the other  

How does the expectation of a future price increase typically affect current demand  

-it increases current demand  

What is a "normal good" in economics 

-a good whose demand increases as income increases 

in economic terms "demand" usually refers to  

-the willingness and ability to purchase a good at various prices  

When the price of a good changes, what happens to the demand curve  

-we move long the existing curve 

What is considered unitary elastic demand  

-when elasticity equals 1 

Which of the following factors does not typically affect the elasticity of demand  

-the color of the product  

What is the primary measure of elasticity of demand  

-the percentage change in quantity demanded divided by the percentage change in price   

According to the law of supply, what happens when the price of a good increases  

-producers will offer more of the good 

What remains constant in a supply schedule for a specific good  

-other factors affecting production costs  

What is the impact of a new oil discovery on the supply of oil to the U.S. market  

-it increases the supply and shifts the supply curve to the right  

What role does technology play in input costs and supply  

-it decreases production costs and increases supply  

How does a decrease in the cost of raw materials affect supply  

-supply increases at all price levels  

How do rising prices affect new firms considering entering a market  

-they encourage new firms to enter the market to earn profits  

If the price of pizza rises and the cost of making pizza stays the same, what will likely happen  

-the pizzeria will earn higher profits to produce more pizza 

What does term 'marginal revenue' refer to 

-the additional income from selling one more unit of a good  

What are variable costs  

-costs that rise or fall depending on the quantity produced 

How can a firm determine the most profitable level of output  

-by finding the output level where marginal revenue equals marginal cost  

What is a price floor  

-minimum price set by the government  

When a new fad causes a rapid increase in demand, what initially happens in the market  

-a shortage occurs as demand exceeds supply  

What is the consequence of setting a minimum wage above the equilibrium wage  

-surplus of labor  

How do firms typically respond to a shortage in the market  

-by increasing prices to balance demand and supply  

What is the effect of a government imposed tax on car manufacturers on the supply curve  

-the supply curve shifts to the left decreasing supply  

What does a surplus in the market indicate  

-supply exceeds demand  

What might cause a pizzeria owner to throw out many slices of pizza at the end of the day 

-surplus  

What is the effect of a price ceiling set below the equilibrium price  

-shortage of goods  

Which factor is a non-price determinant that can shift the demand curve  

-consumer expectations  

What does a rightward shift in the demand curve indicate  

-an increase in consumer demand for the product  

Personal Finance  

What is the potential consequence of credit card abuse  

-struggling to pay balances  

What feature is unique to free checking accounts  

-higher interest rates on deposites  

Why is it important to start thinking about budgeting and saving now  

-it prepares you for financial independence after high school  

Why might someone choose a checking account with overdraft protection  

-to avoid fees for writing checks without sufficient funds  

What is the primary purpose of a personal budget  

-to track how you spend your money  

Why should you focus on wants when cutting expenses  

-wants are less important than needs  

What is the advantage of using a certificate of deposit (CD) for savings  

-generally higher interest rates than regular saving accounts  

How can federal student loans be beneficial  

-they have a fixed interest rate  

What is a secured loan  

-a loan backed by an asset  

What is the primary advantage of mutual funds  

-they provide instant diversification  

What is the main advantage of using a credit card responsibly  

-building a strong credit history  

What is the potential benefit of investing in stocks compared to bonds  

-stocks have historically offered higher returns  

Which of the following is a characteristic of compound interest  

-interest on top of interest  

What is a potential consequence of having a low credit score  

-higher interest rates on loans  

What is a recommended amount for an emergency fund  

-three to six months of income  

What does the time value of money principle suggest  

-money grows through compound interest  

Why is auto insurance often required by law  

-to ensure all drivers have financial protection against accidents  

What is the purpose of life insurance  

-to provide a set amount to a beneficiary in case of death  

How can a policy holder lower their insurance costs 

-by increasing deductibles 

What does actual cash value (ACV)mean in terms of insurance coverage 

-it insures belongings for their depreciated value  

What is a deducible in the context of insurance  

-the amount you pay before the insurance company covers the loss  

Which coverage would help if your car is stolen  

-comprehensive  

How do insurance companies reduce their costs  

-by requiring policyholders to pay copays and deductibles  

What does a deductible represent in an insurance policy  

-the portion you pay before insurance pays  

What is the role of a policy in insurance terms  

-a legal document outlining coverage terms  

What type of coverage pays for damage to your car regadless of fault 

-collision  

What is the primary purpose of the federal trade commission (FTC) concerning consumer protection  

-to protect consumers against fraud and unfair business practices  

What is a common rule of thumb for rent and utility payments  

-they should not exceed one weeks take home pay  

Which is a benefit of buying a used car over a new car 

-lower insurance costs  

Why is budgeting important when planning a major purchase like a car or home  

-to ensure you can afford the purchase without financial strain  

Why is it important to complete the FAFSA form  

-to be considered for federal student aid such as grants and loans  

How can you protect yourself from identity theft  

-using strong passwords and being cautious with personal information  

Why might leasing a car be more appealing than buying one  

-avoiding a long term financial commitment  

How do online shopping sites secure experience  

-by using encrypted payment process and secure websites  

What is the main purpose of renters insurance  

-to insure against theft or damage to your personal property  

What is the main advantage of a fixed-rate mortgage  

-payments remain the same over the life of the loan  

Personal finance test (answers I got wrong on the test) 

Which of the following is true of buying a stock by using a "limit" buy option  

-you can choose whatever price you want to purchase the stock at  

What is simple interest  

-interest rate that is given for taking out a loan that is paid on top of the principal balance owed  

What is the primary purpose of a credit report  

-to evaluate your financial risk to lenders  

What type of tax is a Social Security tax considered  

-payroll tax 

People have two options when looking for places to live. Rent or buy. Which of the following statements is true about the cost-benefit analysis that goes into deciding where to live  

-when owning a home you know that the value of your property could go down  

Macroeconomics  

-How many federal reserve districts are there in the united states  

-12 

What is the purpose of the federal open market committee (FOMC) 

-to make key monetary policy decisions about interest rates and money supply  

Which of the following is NOT one of the characteristic of money  

-unlimited supply  

-what happens if there is too much fiat money in circulation  

-it can lead to inflation  

What is the primary role of the Federal Reserve System  

-to manage the united states monetary policy  

How does the Federal Reserve regulate the nations money supply  

-by setting the discount rate, reserve requirements, and using open market operations  

How does money functions as a unit of account  

-it provides a way to compare value of goods and services  

What is the main reason money is considered a store of value  

-it maintains its value over time unless affected by inflation  

Which of the following is NOT one of the three uses of money according to economics  

-source of income  

What is one function of the federal reserve system in serving the federal government  

-processing all checks the government writes