Economics Final Review

Front

What are the three basic questions of economics?

Back

What to produce?

How to produce?

For whom to produce?

Front

What are the four kinds of goods?

Back

Durable - lasts 3+ years

Nondurable - lasts less than 3 years

Consumer - intended for final use by consumer

Commercial - used by business to produce other goods

Front

What are the four factors of production?

Back

Land

Labor

Capital

Entrepreneurship

Front

What is opportunity cost?

Back

The value of the next best alternative given up

(for example, you buy shoes and now you don't have money for a jacket. The jacket is your opportunity cost of buying shoes)

Front

What is a traditional economy?

Back

Use of resources stems from habit, ritual, or custom

Front

What is a command economy?

Back

A central authority makes the major decisions about what, how, and for whom to produce

Front

What is a market economy?

Back

What, how, and for whom are primarily answered by people who make supply and demand decisions in their own best interest

Front

What are the three functions of money?

Back

Medium of exchange

Measure of value

Store of value

Front

What is the difference between simple and compounding interest?

Back

Simple interest is calculated on the amount you deposit; with compounding interest, interest is added to the principle and the next round of interest is calculated based on the new principle

Front

How can you improve your credit rating?

Back

Open a credit card (establish credit history)

Make all payments on time

Keep credit available (keep use around 30% of credit)

Maintain a source of income (job)