Economics - Ch6

Economics is the study of

• money and power

• people and things

• people and choices

• countries and governments

What is opportunity cost?

• whatever you give up to do something

• the amount of money you spend

• the amount of money you save

• it is GDP

Scarcity is the tension between

• best friends

• infinite wants and finite resources

• the amount of land owned

• the number of workers in the economy

Government officials use economic theory to guide

• factors of production

• a horse drawn carriage

• buy and sell stocks

• public policy

Incentives are a set of external (rather than intrinsic) _____________________________ that explain people’s choices.

• motivators

• demotivators

What is the difference between macroeconomics and microeconomics?

• Macroeconomics studies the people; microeconomics studies animals

• Microeconomics studies the economy as a whole ( looks at the whole nation’s output, unemployment, interest rates, government spending, and growth); macroeconomics is the study of how consumers, workers, and firms interact to generate outcomes in specific markets

• Macroeconomics studies the economy as a whole ( looks at the whole nation’s output, unemployment, interest rates, government spending, and growth); microeconomics is the study of how consumers, workers, and firms interact to generate outcomes in specific markets

• Microeconomics studies the countries; macroeconomics studies the people

During the Industrial Revolution, Adam Smith concluded that the source of prosperity was specialization, or what he called the ______________________________________, that made countries wealthy.

• invisible hand

• division of labor

• scarcity

• opportunity cost

Specialization makes people more productive,

but Adam Smith said that it is ____________

that makes them better off.

• animals

• people

• trade

• goodwill

What is this graph called?

• Scarcity chart

• Opportunity cost chart

• Production Possibilities Frontier

• Planes and Shoes

What is everything on the inside of the graph called?

• impossible

• efficient

• inefficient

• trade