Civics-Economics Test Review Test Date 4/22/08 60 Questions/180 Points
The Basic Economic Problem Scarcity All resources are scarce so all goods and services are scarce.
Needs v. Wants Needs are things that you have to have for survival. A want is anything else.
Goods v. Services Goods are physical and tangible objects. Services are actions or activities that a person performs for another.
Factors of Production Land Labor Capital
Three Basic Economic Questions What to produce? How to produce? For whom to produce?
Opportunity Cost The most desirable alternative to a chosen activity. Production possibilities graph Efficiency Underutilization Guns or Butter Decision
Entrepreneur Risk-taker that starts a business.
Adam Smith Laissez-Faire Wealth of Nations
Economic Systems Traditional Command Market Mixed
Law of Demand Consumers will buy more goods and services at lower prices.
Law of Supply Producers will be willing to produce more when they can charge higher prices.
Equilibrium Price where supply and demand are equal (no shortage or surplus)
Disequilibrium Price where supply and demand are not equal (creates a surplus or a shortage)
Business Organizations Sole Proprietorship Partnership Corporations (stock/dividends) You should know the percentage each organization represents as well as the advantages and disadvantages.
Corporate Mergers Horizontal Vertical Conglomerate
Inflation What is it? Demand-pull Cost-push CPI and market basket
Gross Domestic Product What does it measure? Export Import
Unemployment Structural Frictional Seasonal Cyclical Underemployment
Business Cycle What is it? Expansionary Peak Contractionary Trough What happens to GDP and unemployment during each phase? Recession Stagflation
Monetary Policy What is it? Expansionary Purpose Expansionary Tools Contractionary Purpose Contractionary Tools
Fiscal Policy What is it? Expansionary Purpose Expansionary Tools Contractionary Purpose Contractionary Tools