Principles of Economics and Economic Analysis Quiz

Resources are limited relative to human wants.

Total value of all goods and services produced within a country's borders.

Inverse relationship between price and quantity demanded.

Value of the best alternative forgone when a decision is made.

Measure of responsiveness of quantity demanded to changes in price.

Medium of exchange, not a primary factor of production.

Market structure with many buyers and sellers, homogeneous products, and easy entry and exit.

Assumption that all other relevant factors remain constant except the one being studied.

Term not commonly used in economics; unemployment types typically include frictional, structural, and cyclical.

Illustrates the maximum output combinations of two goods given available resources and technology.

Government's use of spending and taxation to stabilize the economy.

Basis for trade where countries specialize in producing goods with lower opportunity costs.

Measures changes in the price level of a market basket of consumer goods and services purchased by households.

Occurs when monetary policy becomes ineffective due to very low interest rates.

Firms and consumers have no influence on the market price, they accept the price as given.

Change in satisfaction from consuming one additional unit of a good or service.

Statistic used to measure the dispersion of income or wealth within a population.

Depression is characterized by longer periods of economic decline and severe contraction compared to a recession.

Components typically include consumption, investment, government spending, and net exports.

Measure of satisfaction derived from consuming a good or service.

Metaphor describing how self-interest and competition lead to the most efficient allocation of resources.

Focuses on internal factors driving economic growth, like innovation and human capital.

Economic agents make decisions based on expectations of the future, which are often rational and self-fulfilling.

Process where new innovations replace outdated technologies and industries.

Shows the theoretical relationship between tax rates and tax revenue; depicts the point at which tax revenue is maximized.