Civics-EconomicsCivics-Economics

Test ReviewTest Review

Test Date 4/22/08Test Date 4/22/08

60 Questions/180 Points60 Questions/180 Points

The Basic Economic The Basic Economic ProblemProblem

ScarcityScarcity All resources are scarce so all goods and All resources are scarce so all goods and

services are scarce.services are scarce.

Needs v. WantsNeeds v. Wants

Needs are things that you have to have Needs are things that you have to have for survival.for survival.

A want is anything else.A want is anything else.

Goods v. ServicesGoods v. Services

Goods are physical and tangible objects. Goods are physical and tangible objects. Services are actions or activities that a Services are actions or activities that a

person performs for another. person performs for another.

Factors of ProductionFactors of Production

LandLand LaborLabor CapitalCapital

Three Basic Economic Three Basic Economic QuestionsQuestions

What to produce?What to produce? How to produce?How to produce? For whom to produce?For whom to produce?

Opportunity CostOpportunity Cost

The most desirable alternative to a The most desirable alternative to a chosen activity.chosen activity.

Production possibilities graphProduction possibilities graph EfficiencyEfficiency UnderutilizationUnderutilization Guns or Butter DecisionGuns or Butter Decision

EntrepreneurEntrepreneur

Risk-taker that starts a business.Risk-taker that starts a business.

Adam SmithAdam Smith

Laissez-FaireLaissez-Faire Wealth of NationsWealth of Nations

Economic SystemsEconomic Systems

TraditionalTraditional CommandCommand MarketMarket MixedMixed

Law of DemandLaw of Demand

Consumers will buy more goods and Consumers will buy more goods and services at lower prices.services at lower prices.

Law of SupplyLaw of Supply

Producers will be willing to produce more Producers will be willing to produce more when they can charge higher prices.when they can charge higher prices.

EquilibriumEquilibrium

Price where supply and demand are Price where supply and demand are equal (no shortage or surplus)equal (no shortage or surplus)

DisequilibriumDisequilibrium

Price where supply and demand are not Price where supply and demand are not equal (creates a surplus or a shortage)equal (creates a surplus or a shortage)

Business OrganizationsBusiness Organizations

Sole Proprietorship Sole Proprietorship PartnershipPartnership Corporations (stock/dividends)Corporations (stock/dividends)

You should know the percentage each You should know the percentage each organization represents as well as the organization represents as well as the advantages and disadvantages.advantages and disadvantages.

Corporate MergersCorporate Mergers

HorizontalHorizontal Vertical Vertical ConglomerateConglomerate

InflationInflation

What is it?What is it? Demand-pullDemand-pull Cost-pushCost-push CPI and market basketCPI and market basket

Gross Domestic ProductGross Domestic Product

What does it measure?What does it measure? ExportExport ImportImport

UnemploymentUnemployment

StructuralStructural FrictionalFrictional SeasonalSeasonal CyclicalCyclical

UnderemploymentUnderemployment

Business CycleBusiness Cycle

What is it?What is it? ExpansionaryExpansionary PeakPeak ContractionaryContractionary TroughTrough What happens to GDP and unemployment What happens to GDP and unemployment

during each phase?during each phase? RecessionRecession StagflationStagflation

Monetary PolicyMonetary Policy

What is it?What is it? Expansionary PurposeExpansionary Purpose Expansionary ToolsExpansionary Tools Contractionary PurposeContractionary Purpose Contractionary ToolsContractionary Tools

Fiscal PolicyFiscal Policy

What is it?What is it? Expansionary PurposeExpansionary Purpose Expansionary ToolsExpansionary Tools Contractionary PurposeContractionary Purpose Contractionary ToolsContractionary Tools