Econ Review

What role does government play in the circular flow model?

• purchases goods and services in the product market
• collects taxes from businesses and individuals
• purchases resources in the factor market
• all of the above

*NO consumer choice
*No competition
*NO innovation
*Government makes all economic decisions
What kind of economy? 

• Traditional
• Command
• Mixed

Sales, Property, and Income are types of:

• Money
• Stocks
• Taxes

*Too little money in economy
*High unemployment
*Decline in consumer demand
*Prices decrease
What economic state is this? 

• Recession
• Inflation
• Intermediary

The interaction of supply and demand determines:

• Opportunity cost
• Prices
• Interest rates

People use money to buy goods and services.  What is another way to say that?

• Money is a store of value
• Money is a medium of exchange
• Money is a unit of account 

The inverse relationship between price and quantity that describes what consumers will buy is

• Substitution Effect
• Law of Demand
• Law of Supply
• Law of Diminishing Marginal Utility

A demand curve shows:

• Only the income that a consumer can use
• Contains quantities that producers are willing to sel
• Consumers buy more at higher prices
• Consumers will want more quantities at lower prices

The quantity of a product a producer is willing to sell at various prices is called 

• Demand
• Supply
• Quantity Demanded 
• Quantity Consumed

What is profit? 

• A place where consumers and producers meet
• Supplying goods and services
• Personal savings
• Money remaining after producers have paid all their costs