B.11 Economic concepts

Question 1

Economic model describing how prices and quantities of goods and services are determined in a market system.

Answer 1

Supply and Demand

Question 2

Total monetary value of all finished goods and services produced within a country’s borders in a specific time period.

Answer 2

Gross Domestic Product

Question 3

Fluctuations in economic activity characterized by periods of expansion and contraction.

Answer 3

Business Cycles

Question 4

Percentage of the labor force that is jobless and actively seeking employment.

Types: Frictional, structural, cyclical.

Answer 4

Unemployment Rate

Question 5

Rate at which the general level of prices for goods and services rises, eroding purchasing power.

Answer 5

Inflation

Question 6

The cost of borrowing money, expressed as a percentage of the amount borrowed.

Answer 6

Interest Rates

Question 7

Graph showing the relationship between interest rates and the maturities of debt securities.

Answer 7

Yield Curve

Question 8

Government adjustments to spending and taxation to influence the economy.

Answer 8

Fiscal Policy

Question 9

Central bank actions that manage the money supply and interest rates to influence economic activity.

Answer 9

Monetary Policy

Question 10

The value of one currency for the purpose of conversion to another.

Answer 10

Exchange Rates

Question 11

Economic theory that compares different countries’ currencies through a “basket of goods” approach.

Answer 11

Purchasing Power Parity

Question 12

The value of the next best alternative that must be given up when a choice is made.

Answer 12

Opportunity Cost

Question 13

The additional satisfaction or benefit received from consuming one more unit of a good or service.

Answer 13

Marginal Utility

Question 14

Measure of how much the quantity demanded or supplied of a product changes in response to a change in price.

Answer 14

Elasticity

Question 15

The ability of an entity to produce a good or service at a lower opportunity cost than others.

Answer 15

Comparative Advantage

Question 16

The ability of an entity to produce more of a good or service with the same amount of resources as others.

Answer 16

Absolute Advantage

Question 17

Total demand for goods and services within an economy at a given overall price level and in a given time period.

Answer 17

Aggregate Demand

Question 18

Total supply of goods and services that firms in an economy plan to sell during a specific time period at a given price level.

Answer 18

Aggregate Supply

Question 19

Economic condition characterized by slow growth, high unemployment, and rising prices (inflation).

Answer 19

Stagflation

Question 20

Economic concept depicting an inverse relationship between the rate of unemployment and the rate of inflation.

Answer 20

Phillips Curve

Question 21

Situation where increased government spending leads to reduced investment by the private sector.

Answer 21

Crowding Out Effect

Question 22

Illustrates the relationship between tax rates and tax revenue.

Answer 22

Laffer Curve

Question 23

The concept that an initial change in spending leads to a larger overall increase in economic activity.

Answer 23

Multiplier Effect

Question 24

A situation in which interest rates are low and savings rates are high, rendering monetary policy ineffective.

Answer 24

Liquidity Trap

Question 25

**Statistics** used to gauge the **health of an economy**.

Answer 25

Economic Indicators

Question 26

The **skills**, **knowledge**, and **experience** possessed by individuals that contribute to **economic productivity**.

Answer 26

Human Capital

Question 27

Unemployment caused by **mismatches** between the **skills of workers** and the **demands of the job** market.

Answer 27

Structural Unemployment

Question 28

Unemployment tied to the **ups and downs** of the **business cycle**.

Answer 28

Cyclical Unemployment

Question 29

**Temporary unemployment** that occurs when workers are **between jobs** or **entering the workforce**.

Answer 29

Frictional Unemployment

Question 30

Occurs when a country **imports more goods and services than it exports**.

Answer 30

Trade Deficit

Question 31

Occurs when a country **exports more goods and services than it imports**.

Answer 31

Trade Surplus

Question 32

The increasing **interconnectedness** of **economies**, **cultures**, and **trade** across the globe.

Answer 32

Globalization

Question 33

Economic policy of **restricting imports** to protect **domestic industries**.

Answer 33

Protectionism

Question 34

A tax imposed on **imported goods and services**.

Answer 34

Tariff

Question 35

Limits on the **quantity of goods** that can be **imported** into a country.

Answer 35

Quotas

Question 36

**Financial support** provided by **governments** to domestic industries.

Answer 36

Subsidies

Question 37

**Costs or benefits** that affect **third parties** who **did not choose** to incur those costs or benefits.

Answer 37

Externalities

Question 38

Goods that are **non-excludable and non-rivalrous**, meaning they are available to everyone.

Answer 38

Public Goods

Question 39

Situations where the **free market** does **not allocate resources efficiently**.

Answer 39

Market Failure

Question 40

**Comparative markets** focus on efficiency through specialization; **competitive markets** focus on pricing and variety.

Answer 40

Comparative vs. Competitive Market Structures