How do consumers dictate what will be produced in a market economy?

By what consumers do and do not buy.

Provide a real-world example of an Positive Externality.

Your home increases in value due to work done by neighbors.

How do you calculate the GDP per capita of a nation?

Add all goods & services & divide by # of people in a nation

Public Sector industries often have “exclusive markets”. What does that mean?

There is little to no competition in exclusive markets

Why would you NOT want 0% unemployment (or 100% employment) in a market economy?

Need a pool of people ready to work when businesses hire.

One way a business can incentivize increased output is by

Paying those who work harder more.

Review: Why do nations engage in Specialization & Trade?

Trade results in more goods at lower costs.

Explain the Business Cycle.

A period of expansion followed by contraction

If an industry is posing a potential threat to the environment, a government will most likely

Impose regulations on the industry

Why was the 2008 "Great Recession" a macroeconomic event?

It affected the GDP of the entire nation

Explain the relationship between technology and productivity.

Technology makes people more productive.

The difference between human & physical capital.

Human = knowledge / Physical = tools

What is one way a government can foster human capital?

Providing additional funding for education

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Economics Unit 2

26 termsStudBud Administration197 plays

Productivity & the Role of Government in the US Economy.

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Questions 26

Answers

1
How do consumers dictate what will be produced in a market economy?
They do not - producers dictate what will be produced.
By what producers do and do not buy.
By what consumers do and do not buy.
They do not - government decides what they will produce.
2
The value of a particular product compared to the amount of labor needed to make it.
Productivity
Specialization
Incentive
Voluntary Exchange
3
Provide a real-world example of an Positive Externality.
Your home decreases in value due to hurricane damage.
Your home increases in value due to work done by neighbors.
Your house decreases in value due to damage you do to it.
Your house increases in value due to work you do to it.
4
How do you calculate the GDP per capita of a nation?
None of the above
Add all goods & services & divide by # of people in a nation
Add all the goods and services produced in a nation per year
Divide the goods produced by services provided per year
5
Public Sector industries often have “exclusive markets”. What does that mean?
Members only are allowed to purchase in exclusive markets
There is little to no competition in exclusive markets
Productivity is decreased in exclusive markets
Productivity is increased in exclusive markets
6
Why would you NOT want 0% unemployment (or 100% employment) in a market economy?
Need a pool of people ready to work when businesses hire.
Poor people make the rest of us feel richer.
Gives welfare programs a reason to exist.
Everyone would be rich!
7
How does the US government attempt to redistribute wealth?
Through regulations
Through incentive programs
Through welfare programs
Trick question: our government does not redistribute wealth
8
People who benefit from a good or service without paying are known, in economic terms, as
Entrepreneurs
Freedom Riders
Free Masons
Free Riders
9
Which nation has the largest GDP in the world?
India
China
Unites States
Russia
10
One way a business can incentivize increased output is by
Focusing on producing fewer products
Paying all employees equally.
Increasing the work week by one day
Paying those who work harder more.
11
Review: Why do nations engage in Specialization & Trade?
Trade results in more goods at lower costs.
Trade results in fewer goods at higher costs.
Specialization allows nations to produce more goods.
Specialization allows nations to produce fewer goods.
12
Explain the Business Cycle.
When GDP decreases for at least 2 consecutive quarters
When GDP increases for at least 2 consecutive quarters
A period of expansion followed by contraction
A period of high unemployment followed by low unemployment
13
What is the ideal unemployment rate in a market economy?
4.5% to 5%
None of the above.
99% - 100%
0% - 1%
14
Review: The development of skills in a specific kind of work; division of labor.
Specialization
Incentive
Voluntary Exchange
Productivity
15
GDP stands for
Gross Domestic Profits
Gross Dairy Products
Gross Dumb People
Gross Domestic Product
16
If an industry is posing a potential threat to the environment, a government will most likely
Outlaw the industry
Take over the industry
Impose regulations on the industry
Deregulate the industry
17
Which of these do the public sector and private sector have in common?
Exclusive Markets
Employ people
Accountable to the public
Motivated by profit
18
Why was the 2008 "Great Recession" a macroeconomic event?
It was caused by over-speculation in the housing market
Trick question: it was a microeconomic event
It lasted more than 2 fiscal quarters
It affected the GDP of the entire nation
19
A role of the government in the U.S. economy is to
Redistribute income
Resolve market failures
Provide public goods & services
All of the above
20
What do governments use to dis-incentivize behaviors?
Incentives
Education
Regulations
Perverse Incentives
21
Which of these is an economic right according to Free Enterprise economic theory?
Legal Equality
All of the above
Voluntary Exchange
Private Property
22
Which is an international public good?
Tariffs
Peace Treaties
Trade Wars
National Parks
23
Explain the relationship between technology and productivity.
Once robots become sentient they will enslave us all.
Technology makes people more productive.
Technology makes people less productive.
Technology has little to no effect of productivity.
24
There is usually no competition in public sector industries like firefighting. This is called
Free Market
Free Enterprise
Exclusive Market
Market Economy
25
The difference between human & physical capital.
Human = knowledge / Physical = technological
Human = labor / Physical = skills
Human = knowledge / Physical = tools
Human = skillz / Physical = labor
26
What is one way a government can foster human capital?
Deregulating the coal industry
Providing additional funding for education
Improving the nation’s infrastructure.
Maintaining better police protection.

Economics Unit 2 Flashcards | StudBud