Economics 101 Exam 1 Practice Test Questions And All Answers.
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Course
Econ 101
Institution
Econ 101
Microeconomics - Answer the study of the economy at the small-scale level, examining individuals and specifics markets
-deals with individual households and markets (gasoline market)
-how market prices are determined and how they will adjust to a variety of different events (weather and governm...
Economics 101 Exam 1 Practice Test
Questions And All Answers.
Microeconomics - Answer the study of the economy at the small-scale level, examining individuals and
specifics markets
-deals with individual households and markets (gasoline market)
-how market prices are determined and how they will adjust to a variety of different events (weather
and government regulation)
Macroeconomics - Answer The study of the economy at the large-scale level, examining total output,
the price level, and other aggregate measures of the economy
-examines entire economy of a state, a country, or the world
-deals with large-scale issues of an economy like total output, average price levels (and inflation) and
unemployment
-the whole economy can be affected by important national and global events (wars, natural disasters,
and technological innovation, decisions made by government policy makers)
Aggregate - Answer Means "total"
-Used in macroeconomics (aggregation)
Aggregation - Answer In macroeconomics:
-Adds up output across all industries
-Adds up prices to arrive at one measure of how expensive goods and services are this year compared to
last year
-Adds up data about whos employed and who isn't so we know the state of all labor markets and
develop a measure of the unemployment rate
Economics - Answer The study of how individuals and societies allocate scarce resources among many
competing uses
, Resource - Answer Any item, whether a gift of nature, the result of production, or the result of human
effort, that is used to produce goods and services
Land - Answer All natural resources used in production; sometimes referred to as "gifts of nature"
Labor - Answer All physical and mental activity devoted to producing goods and services
Capital - Answer The tools, machinery, infrastructure and knowledge used to produce goods and
services.
-Sometimes divided into "physical" and "human"
Physical capital - Answer refers to tangible items that are created to increase productivity
Human capital - Answer refers to the knowledge and skills that people acquire in order to increase
productivity
Entrepreneurial ability - Answer The talent or ability to combine land, labor, and capital to produce
goods and services.
-Different from human capital and in that it primarily involves assuming risk and organizing resources
into a productive process
Scarcity - Answer A condition that results from the inability of limited resources to satisfy unlimited
wants
-reflects the fact that unlimited wants cannot be completely satisfied with limited resources
Relative scarcity - Answer The comparison of the scarcity of one good, service or resource to that of
another
(relative scarcity of drinkable water as compared to water in general)
Allocation - Answer The process of assigning a good, service, or resource to one use instead of another
(proposal that would change the allocation of public space for recreational use by demolishing a skating
park and building an arboretum)
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