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Terms in this set (26)
Economic theory requires some abstraction from less important details in order to understand the functioning of something as complex as the economy.
If precisely the concern for correct policy decisions that makes economic theory so necessary and so important.
The U.S. economy is the second biggest national economy on earth.
The U.S. Economy is the most efficient economy in the world in terms of transforming inputs (factors of production) into outputs (goods and services).
Consumer spending is approximately 70% of GDP.
Government is unnecessary in a free enterprise economy such as the United States.
The U.S. has more than 28 million business firms, and about 10% of these businesses fail each year.
A free market divides goods and services among consumers in a rational manner by allowing consumers to spend their incomes on the things that are compatible with their preferences.
An optimal decision is one that chooses the most desirable alternative among the possibilities permitted by the available resource.
The downward slope of society's production possibilities frontier implies that hard choices must be made.
Adam Smith described how division of labor, where workers specialize in what they do best, has only a minor impact on increasing workers' efficiency and productivity.
Demand curves can be affected by the prices of related goods.
A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.
Changes in consumer preferences toward sport utility vehicles have shifted their demand curves downward and to the left.
An increase in consumer income will shift both the supply and demand curves.
Cost reducing technological advances shift the supply curve rightward.
Trade is a win-win situation
Which of the following is not one of the "seven ideas beyond the final exam" that will help you in the future to evaluate economic issues that arise in our economy:
Since 1959, in terms of gross domestic product, the U.S. economy has:
70% service producing, 14% manufacturing/goods producing, 16% government
Among non-farm American workers, employment by section is approximately:
Usually slips downward to the right and is bowed outward
Because resources are scarce the production possibilities frontier:
The maximum amount of output is being produced that technology permits
Which of the following is NOT a reason for a society to find itself operating below its production possibilities frontier:
As we move up and to the left
The above PPF for soybeans and wheat shows:
D1 to D2
Assume that the above figure shows demand for orange juice.
Negative, because with everything else equal
The slope of a demand curve is always:
Suppliers are willing to increase production of their goods if they can receive higher prices for them
An upward sloping supply curve is almost always:
If farmer Joe determines that producing 38,000 BU:
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