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Three Key Economic Ideas quiz #1 Flashcards

Three Key Economic Ideas quiz #1
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  • Which of the following explains why economic growth is considered an important economic goal?
    Economic growth is important because it increases the standard of living, provides more opportunities for individuals and firms to make themselves better off, and allows for greater satisfaction of wants and needs.
  • Which of the following statements would a Keynesian economist most likely agree with?
    A Keynesian would agree that government intervention can help stabilize the economy during downturns, as markets do not always self-correct quickly.
  • Why do economists pay close attention to small changes in the rate of economic growth?
    Small changes in economic growth rates can have significant long-term effects on living standards, employment, and overall economic well-being.
  • What does a strong economy depend on the most?
    A strong economy depends most on individuals and firms making rational decisions, responding to incentives, and using marginal analysis to allocate resources efficiently.
  • High and persistent inflation is caused by ________.
    High and persistent inflation is caused by sustained increases in the overall level of prices, often due to excessive growth in the money supply or persistent demand exceeding supply.
  • The Keynesian economic framework is based on the assumption that:
    The Keynesian framework assumes that markets may not always clear efficiently and that government intervention can help achieve full employment and economic stability.
  • How does the concept of marginal analysis help individuals decide how much of a good to consume?
    Marginal analysis helps individuals compare the additional benefit of consuming one more unit to the additional cost, guiding them to consume up to the point where marginal benefit equals marginal cost.
  • Why might the optimum amount of a good, such as pizza, differ from person to person?
    The optimum amount differs because each person's marginal benefit and marginal cost curves are unique, reflecting their individual preferences and circumstances.
  • In the context of economic incentives, what does it mean to 'exploit opportunities'?
    To exploit opportunities means to respond to incentives by making choices that improve one's well-being, such as switching to a cheaper alternative when prices rise.
  • What role do colors play in understanding economic graphs according to the lesson?
    Using different colors in graphs helps organize information and makes it easier to distinguish between concepts like marginal benefit and marginal cost.