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$100 $200 $300 $400 $500 Supply Demand Key Terms Unit 3 Unit 2 Unit 1

C1-$100 - $100 What is scarcity? The fundamental economic problem; the condition that arises when unlimited wants exceed limited resources

C1-$200 - $200 What is a PPC? A Production Possibilities Curve- demonstrate the trade offs an economy that produces two goods faces

C1-$300 - $300 What is the law of demand? The law that states that when the price of a product increases, the quantity demanded decreases, ceteris paribus

C1-$400 - $400 Name two out of the four factors of production land, labor, capital goods, entrepreneurship

C1-$500 - $500 What are the five shifters in consumer demand? Taste and preferences, number of consumers, price of related goods, income, and future expectations

C2-$100 - $100 What is the formula to calculate GDP? GDP=C+I+G+Xn GDP= Consumer spending + investments + government expanding + net exports

C2-$200 - $200 Which type of unemployment deals with change in the structure of the labor force that makes for certain skills to no longer be demanded Structural

C2-$300 - $300 What is Real GDP? The market value of all final goods and services produced in the nation during a particular period, usually a year; adjusted for inflation.

C2-$400 - $400 What are discouraged workers? Those who drop out of the labor force in frustration because they can't find work.

C2-$500 - $500 Identify which for which calculation the following equation is designed for: GDP per capita=(GDP/size of the population GDP per capita

C3-$100 - $100 What is laissez faire? A public policy of not interfering with market activities in the economy

C3-$200 - $200 What is discretionary fiscal policy? Deliberate changes of government expenditures and/or taxes to achieve particular economic goals

C3-$300 - $300 What is expansionary fiscal policy? Increases in government expenditures and/or decreases in taxes to achieve particular economic goals

C3-$400 - $400 What is the inflationary gap? The condition where the Real GDP the economy is producing is greater than the Natural Real GDP and the unemployment rate is less than the natural unemployment rate

C3-$500 - $500 What is the real balance effect? The changes in the purchasing power of dollar- dominated assets that results from a change in the price level

C4-$100 - $100 Define stagflation The simultaneous occurrence of high rates of inflation and unemployment

C $200 Define cyclical unemployment Unemployment that fluctuates with the business cycle, increasing during contractions and decreasing during expansions

C3-$300 - $300 Define ceteris paribus With all other factors remaining the same

C3-$400 - $400 Define recessionary gap The condition where the Real GDP the economy is producing is less than the Natural Real GDP and the unemployment rate is great than the natural unemployment rate

C3-$500 - $500 Define fallacy of composition The incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or whole.

C4-$100 - $100 The law of demand illustrates a(n)________ relationship Inverse, downward sloping

C4-$200 - $200 What is equilibrium? the price and quantity where supply and demand meet

C4-$300 - $300 What is quantity demanded? It is the number that is bought at that single price

C4-$400 - $400 Due to what three reasons does the demand curve slope downward? -Diminishing marginal utility -The income effect -The substitution effect

C4-$500 - $500 What does a change in quantity demanded indicate? It refers to a movement from one point to another on the demand curve.

C4-$100 - $100 What is supply? It is the quantity of goods producers are willing and able to produce

C4-$200 - $200 What is the law of supply? Contends that the upward-sloping supply curve illustrates the direct relationship between price and quantity sold. According to the Law of Supply, as the price rises, producers increase the quantity supplied; as the price falls, firms produce less.

C4-$300 - $300 When a producer is able to sell the product for a higher price, the quantity supplied by the firm ________; when the price of the product falls, the quantity supplied ________. Increases; falls

C4-$400 - $400 An increase in the cost of production ___________(reduces/increases) supply and shifts the curve to the _______ (L/R). Reduces; Left

C4-$500 - $500 What are the shifters of supply? Prices/Availability of inputs Number of Sellers Technology Government Action Opportunity Cost of Alternative Production Expectations of Future Profit