Economics Study Guide

Economics Study Guide

True/False

Indicate whether the sentence or statement is true or false.

____ 1. When manufactured goods are used to produce other goods and services, they are called capital goods.

____ 2. The circular flow of economic activity describes an economy that is free of markets.

____ 3. In economics, land refers to the natural resources needed for production, such as forests, minerals, and climate.

____ 4. The four factors of production are land, capital, labor, and financing.

____ 5. Economics is a social science because it deals with how people behave while trying to satisfy their needs and wants through use of relatively scarce resources.

____ 6. Economic products consist of both goods and services that are useful, relatively scarce, and transferable to others.

____ 7. Division of labor increases efficiency because it allows workers to master many aspects of their jobs.

____ 8. Time is an opportunity cost when a manufacturer assigns workers to one task rather than to another.

____ 9. The production possibilities frontier can be reached even if certain resources remain idle.

____ 10. Capitalism is a competitive economic system in which private citizens own the factors of production.

____ 11. The profit motive states that the consumer decides WHAT goods and services to produce.

____ 12. The entrepreneur organizes land, capital, and labor for production in hopes of earning a profit.

____ 13. The United States has a modified private enterprise economy.

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

____ 14. The situation in which some necessities have little value while some non-necessities have a much higher value is known as

____ 15. Manufactured goods needed to produce other goods and services are called

____ 16. To arrive at an economic decision, a decision-making grid may be used to evaluate

____ 17. Division of labor is a characteristic of

____ 18. The study of economics is important because it enables us to

____ 19. The dollar value of all final goods and services and the most comprehensive measure of a country's total production output is

____ 20. A popular model used to illustrate the concept of opportunity cost is

____ 21. An economy at its production possibilities frontier is operating

____ 22. The money used to buy the tools and equipment needed for production is known as

____ 23. Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of

____ 24. Which of the following choices best describes what this production possibilities frontier is depicting?

____ 25. In the production possibilities frontier shown in this graph, what could cause production to move from point b to point d?

____ 26. According to Alice Rivlin in the passage, if you have a rudimentary working knowledge of economic concepts, you will be

____ 27. The purpose of government in a command economy is to

____ 28. An example of a market economy is

29. Which of the following is NOT considered an economic and social goal?

____ 30. Which group of people ultimately determines the products that a free enterprise economy produces?

____ 31. The United States can best be described as having a

____ 32. All of the following are characteristics of a command economy EXCEPT

____ 33. A market economy

____ 34. The minimum wage is an example of a federal law that supports

____ 35. The concept of voluntary exchange means

____ 36. The government's role in a mixed economy is that it is the

Completion

Complete each sentence or statement.

37. ______describes the concept that everything we do has a cost.

38. WHAT, HOW, and FOR WHOM to ______are the three basic economic questions.

39. The ______of production include land, labor, capital, and entrepreneurs.

40. ______is a key measure of a nation's economic health.

41. The study of ______helps all of us to become more informed citizens and better decision makers.

42. A ______grid can be used to evaluate alternatives.

43. The opportunity cost of doing something is the next best alternative, or ______, that you give up.

44. A production possibilities frontier shows the various possible combinations of output than can be produced when all ______are fully employed.

45. When economic growth takes place, the ______shifts outward, showing that more products are produced than before.

46. The study of economics helps people make better ______.

47. The way in which a society provides for the wants and needs of its people determines the type of ______it has.

48. In a traditional economy, people's roles are determined by the ______of their elders and ancestors.

49. In the former Soviet Union's command economy, ______made the major economic decisions.

50. One strength of a market economy is the high degree of consumer ______.

51. One disadvantage of a ______economy is the high degree of uncertainty that businesses and workers face as the result of change.

52. A rise in the general level of prices is called ______.

53. Economic ______is an economic goal that is based on a sense of fairness.

54. Economic ______is necessary to meet the needs of a growing population by providing more goods and services.

55. Social Security is a federal program that addresses the goal of economic ______.

56. Political elections are one method of resolving conflicts among economic ______.

57. When buyers and sellers make a ______, both parties are better off.

58. People and companies make most of the WHAT, HOW, and FOR WHOM decisions in a ______.

59. In a free enterprise system, people who risk their savings to gain wealth are doing it because of the ______.

60. Capitalism benefits consumers because ______keeps prices low.

61. In a ______, a central authority makes most of the WHAT, HOW, and FOR WHOM decisions.

62. In the United States, the customer's control of the market is called ______.

66. When the rate of ______rises, people generally pay more for most products.

64. Entrepreneurs and other private citizens, rather than the government, own the factors of production in a market economy based on ______.

65. People who are living on a ______find that it is more difficult to pay bills and plan for the future when prices keep going up.

66. Our economic system is called a ______because people generally carry on their economic affairs freely, but are subject to some government regulation.