Who are people that study financial structures and the marginal analysis of financial decisions?
economists
Economists analyze how financial decisions are made and their implications.
What are the two basic principles supported by the study of economics?
- Society and its individuals have unlimited wants
- Society’s resources are limited
These principles highlight the conflict between desires and resource availability.
What is the lens of scarcity in economics?
There are never enough resources (oil, water, time)
This concept emphasizes the limitations of resources despite human desires.
List the four different types of limited economic resources.
- Land
- Capital
- Labor
- Entrepreneurial Ability
Each type of resource has its own constraints and significance in production.
Fill in the blank: Money is not an economic resource because it _______.
doesn’t make anything by itself
Money serves as a medium of exchange but does not produce goods.
What does opportunity cost refer to?
An opportunity to potentially gain from other alternatives has been lost
This cost represents the value of the next best alternative that is forgone.
True or false: Companies offer free stuff through promotions and giveaways because nothing is ever free in the economy.
TRUE
The cost of promotions is absorbed through other resources like money, time, and labor.
What is the Fiscal Policy?
Governmental allocation and collection of money within the state
Fiscal Policy includes how the government spends, allocates, and collects money.
What are the three different stances the government can take in response to Fiscal Policy?
- Neutral stance
- Expansionary stance
- Contractionary stance
Each stance reflects different approaches to government spending and revenue collection.
What is a blue chip stock?
Stock in a well-known/established company; expensive but solid investments
Blue chip stocks are considered safer long-term investments.
How does the stock market affect the larger financial structure of the economy?
When stockholders benefit, they tend to reinvest, leading to more innovation and job creation
This cycle contributes to economic growth and stability.
What happens when the stock market crashes?
Investors lose money, companies have no funds, leading to job losses and decreased consumerism
A crash can have widespread negative effects on the economy.
What is the role of trade policies in economics?
Influence costs, competition, and product innovation
Tariffs and trade agreements can significantly impact market dynamics.
What is meant by rational self-interest in economics?
People make choices based on overall cost and benefit
This principle guides individuals in decision-making during times of scarcity.
Fill in the blank: Labor refers to _______.
physical + mental work used to make products
Labor is a critical resource in the production process.
