Flashcards: Introduction to Economics — 19 cards

What does the adjective 'economic' relate to?

Trade, industry, money, business, and the economy.

What does 'economical' describe about resource use?

Using few resources or using them carefully and efficiently.

What is the economy?

The system for producing, distributing, selling, and purchasing goods and services.

What does economics study?

The production, distribution, and consumption of goods and services under scarcity.

What is the origin of the word economy?

It comes from the ancient Greek word "oikonomia" meaning household management.

What does the scarcity principle state about resources and human wants?

Resources are limited while human wants are unlimited.

Why must individuals, businesses, and governments make choices according to the scarcity principle?

Because resources are limited and wants are unlimited, requiring priorities.

What does scarcity lead people and institutions to do regarding resources?

Choose how to produce and consume, make trade-offs, and seek efficiency.

Name some examples of scarce resources.

Material resources, petrol, electricity, water, money, food, and skilled workers.

What does the cost-benefit principle state about taking an action?

Take an action if and only if its benefits are at least as great as its costs.

What happens when benefits exceed costs according to the cost-benefit principle?

The action can satisfy individuals and contribute to economic growth.

What is the outcome when benefits equal costs in an action?

The action is neither positive nor negative.

What occurs when costs exceed benefits in an action?

The action can produce regret and frustration.

What does microeconomics study?

Economic decisions by individuals and businesses and their market effects.

What does macroeconomics study?

The entire economy and large-scale economic decisions and outcomes.

Which economic factors are included in macroeconomics?

Interest rates, inflation, unemployment, GDP, growth, and government measures.

How does inflation affect production costs and prices?

Inflation increases production costs and prices charged by businesses.

What impact does inflation have on individuals’ purchasing power?

Inflation reduces individuals’ purchasing power.

How can inflation influence workers' salary demands?

Inflation can lead workers to request higher salaries.