WGU D089 Principles of Economics
Exam 2026 Questions and Answers
Macroeconomics - Correct answer-A branch of economics dealing with the
performance, structure, behavior, and decision-making of an economy as a whole
Microeconomics - Correct answer-A branch of economics that studies the behavior
of individuals and firms in making decisions regarding the allocation of scarce
resources and the interactions among these individuals and firms
Scarcity - Correct answer-The basic economic problem; the gap between limited,
scarce , resources and theoretically limitless wants
Opportunity cost - Correct answer-The next best alternative that is given up when a
choice is made
Think at the margin - Correct answer-Thinking about what the next step or an
additional action means for a person
Marginal benefit - Correct answer-The incremental increase in the benefit to a
consumer caused by the consumption of one additional unit of a good or service
Principles of Economics #1 - Correct answer-Everyone faces trade-offs
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,Principles of Economics #2 - Correct answer-The cost of something is determined
by what you give up to get it
Principles of Economics #3 - Correct answer-Rational people think at the margin
Principles of Economics #4 - Correct answer-People respond to incentives
Principles of Economics #5 - Correct answer-Trade can benefit everyone
Principles of Economics #6 - Correct answer-Markets are a sound method of
organizing economic activity
Principles of Economics #7 - Correct answer-Governments may be able to improve
market outcomes
Principles of Economics #8 - Correct answer-A nation's standard of living depends
on it's ability to produce.
Principles of Economics #9 - Correct answer-Printing too much money causes
prices to rise
Principles of Economics #10 - Correct answer-There is a short-run trade-off
between inflation and unemployment
Economic systems - Correct answer-A system of the production, resource
allocation, and distribution of goods and services within a society or a given
geographic area
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,Traditional Economy - Correct answer-An economic system that relies on customs,
history, and time-honored beliefs. Tradition guides economic decisions such as
production and distribution
Command Economy - Correct answer-An economic system in which production,
investment, prices, and incomes are determined centrally by a government
Market Economy - Correct answer-An economic system in which the decisions
regarding investments, production, and distribution are guided by the price signals
created by the forces of supply and demand
Mixed Economy - Correct answer-An economic system in which both private
enterprise and a degree of state monopoly (Usually in public services, defense,
infrastructure, and basic industries) co-exist
Five key characteristics of a Traditional Economy - Correct answer-1. It is centered
around families or tribes.
2. It exists in a hunter-gatherer and nomadic society.
3. Trade is heavily dependent on bartering rather than money.
4. It only produces what is needed, and a surplus is very rare.
5. It eventually changes from purely trade to the use of some type of currency.
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, Advantages to a Traditional Economy - Correct answer-There is little competition
or friction among members of the society.
People's roles and contributions are well understood.
It can be more sustainable than a technology-based economy.
Disadvantages to a Traditional Economy - Correct answer-It is exposed to
environmental changes and weather patterns.
It is vulnerable to market of command economies, which consume and deplete the
resources or traditional economies.
Five key characteristics of a Command Economy - Correct answer-1. All economic
activity is planned and controlled by a centralized government power.
2. The government decides how to use and distribute the nation's natural, capital,
and labor resources.
3. A nation's central power controls the priorities for how goods and services will
be produced and distributed.
4. Domestic competition is overpowered as the government monopolizes
businesses considered essential for economic goals such as utilities, finance, and
automotive companies.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Exam 2026 Questions and Answers
Macroeconomics - Correct answer-A branch of economics dealing with the
performance, structure, behavior, and decision-making of an economy as a whole
Microeconomics - Correct answer-A branch of economics that studies the behavior
of individuals and firms in making decisions regarding the allocation of scarce
resources and the interactions among these individuals and firms
Scarcity - Correct answer-The basic economic problem; the gap between limited,
scarce , resources and theoretically limitless wants
Opportunity cost - Correct answer-The next best alternative that is given up when a
choice is made
Think at the margin - Correct answer-Thinking about what the next step or an
additional action means for a person
Marginal benefit - Correct answer-The incremental increase in the benefit to a
consumer caused by the consumption of one additional unit of a good or service
Principles of Economics #1 - Correct answer-Everyone faces trade-offs
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Principles of Economics #2 - Correct answer-The cost of something is determined
by what you give up to get it
Principles of Economics #3 - Correct answer-Rational people think at the margin
Principles of Economics #4 - Correct answer-People respond to incentives
Principles of Economics #5 - Correct answer-Trade can benefit everyone
Principles of Economics #6 - Correct answer-Markets are a sound method of
organizing economic activity
Principles of Economics #7 - Correct answer-Governments may be able to improve
market outcomes
Principles of Economics #8 - Correct answer-A nation's standard of living depends
on it's ability to produce.
Principles of Economics #9 - Correct answer-Printing too much money causes
prices to rise
Principles of Economics #10 - Correct answer-There is a short-run trade-off
between inflation and unemployment
Economic systems - Correct answer-A system of the production, resource
allocation, and distribution of goods and services within a society or a given
geographic area
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,Traditional Economy - Correct answer-An economic system that relies on customs,
history, and time-honored beliefs. Tradition guides economic decisions such as
production and distribution
Command Economy - Correct answer-An economic system in which production,
investment, prices, and incomes are determined centrally by a government
Market Economy - Correct answer-An economic system in which the decisions
regarding investments, production, and distribution are guided by the price signals
created by the forces of supply and demand
Mixed Economy - Correct answer-An economic system in which both private
enterprise and a degree of state monopoly (Usually in public services, defense,
infrastructure, and basic industries) co-exist
Five key characteristics of a Traditional Economy - Correct answer-1. It is centered
around families or tribes.
2. It exists in a hunter-gatherer and nomadic society.
3. Trade is heavily dependent on bartering rather than money.
4. It only produces what is needed, and a surplus is very rare.
5. It eventually changes from purely trade to the use of some type of currency.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, Advantages to a Traditional Economy - Correct answer-There is little competition
or friction among members of the society.
People's roles and contributions are well understood.
It can be more sustainable than a technology-based economy.
Disadvantages to a Traditional Economy - Correct answer-It is exposed to
environmental changes and weather patterns.
It is vulnerable to market of command economies, which consume and deplete the
resources or traditional economies.
Five key characteristics of a Command Economy - Correct answer-1. All economic
activity is planned and controlled by a centralized government power.
2. The government decides how to use and distribute the nation's natural, capital,
and labor resources.
3. A nation's central power controls the priorities for how goods and services will
be produced and distributed.
4. Domestic competition is overpowered as the government monopolizes
businesses considered essential for economic goals such as utilities, finance, and
automotive companies.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
