WGU D089 - PRINCIPLES OF
ECONOMICS EXAM 2025/2026
QUESTIONS AND ANSWERS 100% PASS
Macroeconomics - ANS A branch of economics dealing with the performance, structure,
behavior, and decision-making of an economy as a whole
Microeconomics - ANS 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 - ANS The basic economic problem; the gap between limited, scarce , resources and
theoretically limitless wants
Opportunity cost - ANS The next best alternative that is given up when a choice is made
Think at the margin - ANS Thinking about what the next step or an additional action means
for a person
Marginal benefit - ANS 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 - ANS Everyone faces trade-offs
pg. 1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,Principles of Economics #2 - ANS The cost of something is determined by what you give up to
get it
Principles of Economics #3 - ANS Rational people think at the margin
Principles of Economics #4 - ANS People respond to incentives
Principles of Economics #5 - ANS Trade can benefit everyone
Principles of Economics #6 - ANS Markets are a sound method of organizing economic
activity
Principles of Economics #7 - ANS Governments may be able to improve market outcomes
Principles of Economics #8 - ANS A nation's standard of living depends on it's ability to
produce.
Principles of Economics #9 - ANS Printing too much money causes prices to rise
Principles of Economics #10 - ANS There is a short-run trade-off between inflation and
unemployment
Economic systems - ANS A system of the production, resource allocation, and distribution of
goods and services within a society or a given geographic area
Traditional Economy - ANS An economic system that relies on customs, history, and time-
honored beliefs. Tradition guides economic decisions such as production and distribution
Command Economy - ANS An economic system in which production, investment, prices, and
incomes are determined centrally by a government
pg. 2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,Market Economy - ANS 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 - ANS 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 - ANS 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.
Advantages to a Traditional Economy - ANS 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 - ANS 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 - ANS 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.
pg. 3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, 4. Domestic competition is overpowered as the government monopolizes businesses
considered essential for economic goals such as utilities, finance, and automotive companies.
5. Businesses are required to follow specific hiring and production targets set by the
government. This creates regulations and directives to enforce the centralized plan.
Advantages of a Command Economy - ANS In this type of system, goods, services, and
resources are deployed without concern for environmental or other regulatory issues.
The government can transform the entire society to fit the constraints of its national vision
through nationalizing industry and deciding where workers will be placed.
Disadvantages of a Command Economy - ANS Underlying black market economies tend to
develop as a response to difficult access to goods and services.
Rationing commonly occurs due to poor planning and an inability to meet societal demands.
People are discouraged from innovating and are required to follow orders and keep with the
central plan.
Five key characteristics of a Market Economy - ANS 1. Privately-owned goods and services
are standard, and people and businesses have the right to commercialize their property freely.
2. People can innovate, produce, sell, and purchase goods and services.
3. Prices, production, and job availability are driven by self-motivation and competition,
according to the laws of supply and demand.
4. The economy relies on market efficiency where producers and consumers have access to the
same information to make economic decisions.
5. Government interference is limited to regulating safety, fair access, environmental, and
national defense issues.
Advantages of a Market Economy - ANS Goods and services are readily available because
consumers and businesses have the freedom to negotiate prices.
Production methods are efficient, which increases productivity and profitability.
Innovation is rewarded and encouraged, benefiting the society.
Individuals and organizations invest in successful ventures, which in turn drive innovation and
quality improvement.
pg. 4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
ECONOMICS EXAM 2025/2026
QUESTIONS AND ANSWERS 100% PASS
Macroeconomics - ANS A branch of economics dealing with the performance, structure,
behavior, and decision-making of an economy as a whole
Microeconomics - ANS 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 - ANS The basic economic problem; the gap between limited, scarce , resources and
theoretically limitless wants
Opportunity cost - ANS The next best alternative that is given up when a choice is made
Think at the margin - ANS Thinking about what the next step or an additional action means
for a person
Marginal benefit - ANS 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 - ANS Everyone faces trade-offs
pg. 1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,Principles of Economics #2 - ANS The cost of something is determined by what you give up to
get it
Principles of Economics #3 - ANS Rational people think at the margin
Principles of Economics #4 - ANS People respond to incentives
Principles of Economics #5 - ANS Trade can benefit everyone
Principles of Economics #6 - ANS Markets are a sound method of organizing economic
activity
Principles of Economics #7 - ANS Governments may be able to improve market outcomes
Principles of Economics #8 - ANS A nation's standard of living depends on it's ability to
produce.
Principles of Economics #9 - ANS Printing too much money causes prices to rise
Principles of Economics #10 - ANS There is a short-run trade-off between inflation and
unemployment
Economic systems - ANS A system of the production, resource allocation, and distribution of
goods and services within a society or a given geographic area
Traditional Economy - ANS An economic system that relies on customs, history, and time-
honored beliefs. Tradition guides economic decisions such as production and distribution
Command Economy - ANS An economic system in which production, investment, prices, and
incomes are determined centrally by a government
pg. 2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,Market Economy - ANS 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 - ANS 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 - ANS 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.
Advantages to a Traditional Economy - ANS 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 - ANS 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 - ANS 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.
pg. 3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, 4. Domestic competition is overpowered as the government monopolizes businesses
considered essential for economic goals such as utilities, finance, and automotive companies.
5. Businesses are required to follow specific hiring and production targets set by the
government. This creates regulations and directives to enforce the centralized plan.
Advantages of a Command Economy - ANS In this type of system, goods, services, and
resources are deployed without concern for environmental or other regulatory issues.
The government can transform the entire society to fit the constraints of its national vision
through nationalizing industry and deciding where workers will be placed.
Disadvantages of a Command Economy - ANS Underlying black market economies tend to
develop as a response to difficult access to goods and services.
Rationing commonly occurs due to poor planning and an inability to meet societal demands.
People are discouraged from innovating and are required to follow orders and keep with the
central plan.
Five key characteristics of a Market Economy - ANS 1. Privately-owned goods and services
are standard, and people and businesses have the right to commercialize their property freely.
2. People can innovate, produce, sell, and purchase goods and services.
3. Prices, production, and job availability are driven by self-motivation and competition,
according to the laws of supply and demand.
4. The economy relies on market efficiency where producers and consumers have access to the
same information to make economic decisions.
5. Government interference is limited to regulating safety, fair access, environmental, and
national defense issues.
Advantages of a Market Economy - ANS Goods and services are readily available because
consumers and businesses have the freedom to negotiate prices.
Production methods are efficient, which increases productivity and profitability.
Innovation is rewarded and encouraged, benefiting the society.
Individuals and organizations invest in successful ventures, which in turn drive innovation and
quality improvement.
pg. 4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
