PLATO Economics End of Semester Test
Exam Questions With Correct And Revised
Answers.
Absolute advantage - answer✔✔the advantage gained when a country's per-unit production cost
is lower than that of other countries
acceptability - answer✔✔the property of a good or service being universally acceptable in an
economy
allocation of resources - answer✔✔the distribution of available resources according to the
demands and needs of society
appreciation - answer✔✔an increase in a currency's value
Asia-Pacific Economic Cooperation (APEC) - answer✔✔an economic forum with 21 members
that promotes free trade
assembly line - answer✔✔a manufacturing process in which product parts pass through a series
of machines (or workers) that assemble them into a final product
barrier to entry - answer✔✔an obstacle that prevents competition from entering the market
Board of Governors - answer✔✔a seven-member board that oversees the Federal Reserve
System
budget deficit - answer✔✔a situation in which the government's expenditures exceed its revenue
budget surplus - answer✔✔a situation in which the government's revenue exceeds its
expenditures
capital - answer✔✔the buildings, equipment, and human skills used to produce goods and
services
cartel - answer✔✔a formal organization of companies that collectively coordinates production
and price
central bank - answer✔✔the bank that implements a government's monetary policy and regulates
commercial banks
circular flow model - answer✔✔a model that explains the flow of goods, services, and money in
an economy
collective bargaining - answer✔✔negotiations between an employer and representatives of the
employees
collusion - answer✔✔a secret agreement to set production and price limits
command economy - answer✔✔a situation in which allocation and distribution of resources are
controlled solely by the government
commodity money - answer✔✔an object that has value in itself and can also be used as money
communism - answer✔✔an economic and social system in which private ownership is
completely eliminated and society collectively owns the rights to all resources
comparative advantage - answer✔✔the advantage gained when a country produces goods and
services at lower opportunity cost than other countries in the market
competition - answer✔✔a situation in which a person strives to perform better and be more
successful than someone else
complementary good - answer✔✔a good used with another good or service
consumer sovereignty - answer✔✔the control that consumer preference exercises over the
production of goods and services
contractionary fiscal policy - answer✔✔a decrease in government expenditures, an increase in
taxes, or both enacted for the benefit of the economy
corporation - answer✔✔a business entity whose rights and liabilities are separate from its
shareholders and members
credit card - answer✔✔a card used to buy goods and services on credit based on the holder's
promise to pay for these goods and services plus the interest charged if the balance is not paid
each month
credit - answer✔✔money borrowed with a promise to pay it back later with interest
cultural imperialism - answer✔✔when one country imposes its culture on another country or
society
cyclical unemployment - answer✔✔when people lose their jobs because of cyclical changes in
the business cycle
debit card - answer✔✔a card used for electronic cash transactions and money withdrawal
debt - answer✔✔the amount owed by a borrower to a lender
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