Economics Unit Test

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What is economics?
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The study of human efforts to satisfy seemingly unlimited wants through the use of limited resources.
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What are the three basic questions of economics?
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what goods and services are produced? how are they produced? and for whom?
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What is scarcity? Give an example in your own life of dealing with scarcity.
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Scarcity is a condition that exists because society does not have all the resources to produce all the goods and servicesthat everyone wants. In my own life an example of scarcity is: if you have $25.00, and you want a shirt and skirt that totals to $50.00, you have to sacrifice the skirt and only by the shirt.
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What is fiscal policy? Explain how government uses fiscal policy to influence the economy.
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Fiscal Policy is the involvement in using government spending and taxation to influence the economy. The government uses fiscal policy to influence the economy by shaping how much money the government will spend and how much it will collect through taxes and borrowing.
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What is monetary policy? Explain how the government uses monetary policy to influence the economy.
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Monetary policy involves controlling the supply of money and credit to influence the economy. Government uses this to influence the economy because American’s exchange goods and services through a vast systemof money and credit.
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Capitalism
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when people make the economic descision in free markets
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Communism
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a command system in which the central government directs all major economic decisions
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Identify and describe the economic system of the United States.
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The economic system of the United States is a market economy in which buyers and sellers answer the four basic economic questions.
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progressive tax
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tax based on taxpayer’s ability to pay.
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regressive tax
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tax in which people with lower incomes pay a larger portion of their income.
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excise tax
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tax on the manufacture, transportation, sale, or consumption of certain items such as gasoline,liquor, or cigarettes.
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Federal Reserve System
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The central bank of the United States. Established by congress in 1913, the FRS consists of the Board of Governors – a central governing body in Washington, D.C. – and 12 Regional Reserve Banks.
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Gross Domestic Product
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the sum of all goods and services produced in the nation a year
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unemployment rate
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An unemployment rate of about 4%-6% is considered “healthy”. Lower rates are seen as inflationary due to the upward pressure on salaries ; higher rates threaten a decrease in consumer spending.
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Consumer Price Index
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A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.
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economic indicators
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Statistics that provide information about the performance of the economy and its position in the business cycle., Statistics that provide information about the performance of the economy and its position in the business cycle.

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