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Economics Review
review
28
Economics
12th Grade
03/03/2011

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Term
Also referred to as the Price System because changing prices dictate supply and demand
Definition
Market Economy
Term
Small government planning group determines how the factors of production will be used to produce goods and services, such as in N.Korea and Cuba
Definition
Command Economy
Term
There are no pure command or market economies. To some degree, all modern economies exhibit characteristics of both systems, and are therefore known as what type of economic system?
Definition
Mixed Economy
Term
Economic decisions are based on customs and historical precedent
Definition
Traditional Economy
Term
Every society, regardless of its political structure, must develop what to determine how to use its limited productive resources to answer the three basic economic question
Definition
economic system
Term
The disadvantages of this type of business ownership include potential difficulty raising the financial capital necessary to operate the business and personal liability for all business debts and actions?
Definition
Sole Proprietorship
Term
If a publicly-owned company is profitable, its Board of Directors may share some of the profits of the company with stockholders in the form of what?
Definition
Dividends
Term
In this type of business, the owners liability is limited to the value of the stock they own in the business?
Definition
Corporation
Term
What is it called when a few sellers control a specific area of the economy to the detriment of consumers?
Definition
Oligopoly
Term
What are the three basic ways that businesses raise financial capital?
Definition
Saving, borrowing, stock
Term
What are the 3 questions about production every society must answer because of scarcity?
Definition
What, How, Who
Term
The need to make choices about the use of resources arises because?
Definition
everything that exists if limited or finite in quantity
Term
In the price system, what guides economic activity?
Definition
Changing prices
Term
Name two of the four ways we learned to increase production
Definition
(Adequate amounts of capital; improvements in technology; improvements in the quality of labor; increased specialization and exchange)
Term
The basic problem of economics is what
Definition
Scarcity
Term
Does inflation usually occur in an upturn or downturn in the economy?
Definition
An upturn
Term
Is pollution an example of a positive externality or a negative externality?
Definition
Negative
Term
If the government sets a price too high and demand doesn’t keep up, what is the result
Definition
A surplus)
Term
Name three of the six roles of the U.S. Government in our economy.
Definition
Provides legal framework; ensures competition; provides public goods; controls externalities, redistributes income; stabilizes the economy
Term
One seller controlling a specific area of the economy is referred to as a what?
Definition
Monopoly
Term
If productive resources (land, labor, capital, and entrepreneurship) are the inputs of the production process, what are goods and services?
Definition
Outputs
Term
The best alternative NOT chosen
Definition
Opportunity Cost
Term
What is it called when you give up something in order to get something else?
Definition
trade-off
Term
A price that “equalizes the amount producers want to sell and consumers want to buy?
Definition
Equilibrium Price
Term
What is a major consequence of increased productivity due to specialization and exchange?
Definition
interdependence
Term
What medium of exchange greatly reduces the transaction costs associated with simple trade or barter
Definition
money
Term
We learned that one of the ways to increase productivity is to make improvements in the quality of labor. The increase in skills resulting from education, experience, and training is referred to as what type of capital?
Definition
Human Capital
Term
Name two of the four characteristics of money that make it an effective medium of exchange
Definition
scarce, durable, portable, and divisible
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