WGU D089 LATEST EXAM PRINCIPLES OF
ECONOMICS EXAM UPDATED ACTUAL Exam
Question and Answer (2026/2027) | Grade A+
• 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
• 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
• 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.
• 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.
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 . CORRECT ANSWER: 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 . CORRECT ANSWER: 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 . CORRECT ANSWER: 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 . CORRECT ANSWER: 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.
• Disadvantages of Market Economies . CORRECT ANSWER: Competition
drives market economies, and, in many cases, there are not enough mechanisms
implemented to protect the underprivileged and disadvantaged.
There is a tendency for labor resources to be under-optimized because access to
education and skills improvement may not be affordable and accessible to
everyone.
There can be a sharp contrast between the economic power of the privileged versus
the power of the underprivileged. Society must decide between self-interest and
protecting the vulnerable in a climate where winners are overvalued.
• Advantages of Mixed Economy . CORRECT ANSWER: Goods and services are
distributed to where they are needed the most; therefore, prices are set by supply
and demand.
Competition incentivizes innovation and i,proves the quality of products and
services.
Goods and services are more available and accessible to those who are willing to
pay.
The role of the government is expanded to help ensure access for the
underprivileged.
ECONOMICS EXAM UPDATED ACTUAL Exam
Question and Answer (2026/2027) | Grade A+
• 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
• 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
• 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.
• 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.
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 . CORRECT ANSWER: 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 . CORRECT ANSWER: 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 . CORRECT ANSWER: 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 . CORRECT ANSWER: 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.
• Disadvantages of Market Economies . CORRECT ANSWER: Competition
drives market economies, and, in many cases, there are not enough mechanisms
implemented to protect the underprivileged and disadvantaged.
There is a tendency for labor resources to be under-optimized because access to
education and skills improvement may not be affordable and accessible to
everyone.
There can be a sharp contrast between the economic power of the privileged versus
the power of the underprivileged. Society must decide between self-interest and
protecting the vulnerable in a climate where winners are overvalued.
• Advantages of Mixed Economy . CORRECT ANSWER: Goods and services are
distributed to where they are needed the most; therefore, prices are set by supply
and demand.
Competition incentivizes innovation and i,proves the quality of products and
services.
Goods and services are more available and accessible to those who are willing to
pay.
The role of the government is expanded to help ensure access for the
underprivileged.
