Macroeconomics-Ragan-Chapter 1 Questions
and Answers Verified by Experts
free-market economy an economy in which most economic decisions are made by private
households and firms
mixed economy An economy in which some economics des=cisions are made by firms
and households and some by the government
government in the modern mixed Economy Key institutions are private property and
freedom of contract, both of which must be maintained by active government policies. The
government creates laws of ownership and contract and then provides the institutions, such as
police and courts, to enforce these laws.
Economics The study of the use of scarce resources to satisfy unlimited human wants.
factors of production Resources used to produce goods and services; frequently divided
into the basic categories of land labour, and capital.
goods tangible products, such as cars or shoes
, Services intangible products, such as legal services and education
Production The act of making goods or services
Consumption The act of using goods or services to satisfy wants
Scarcity Limited quantities of resources to meet unlimited wants/implies that choices must
be made, and making choices implies the existence of costs.
opportunity cost The value of the next best alternative that is forgone when one alternative
is chosen
Production possibilities boundary a curve showing which alternative combinations of
output can be attained if all available resources are used efficiently; it is the boundary between
attainable and unattainable output combinations
resource allocation the allocation of an economy's scarce resources among alternative uses
and Answers Verified by Experts
free-market economy an economy in which most economic decisions are made by private
households and firms
mixed economy An economy in which some economics des=cisions are made by firms
and households and some by the government
government in the modern mixed Economy Key institutions are private property and
freedom of contract, both of which must be maintained by active government policies. The
government creates laws of ownership and contract and then provides the institutions, such as
police and courts, to enforce these laws.
Economics The study of the use of scarce resources to satisfy unlimited human wants.
factors of production Resources used to produce goods and services; frequently divided
into the basic categories of land labour, and capital.
goods tangible products, such as cars or shoes
, Services intangible products, such as legal services and education
Production The act of making goods or services
Consumption The act of using goods or services to satisfy wants
Scarcity Limited quantities of resources to meet unlimited wants/implies that choices must
be made, and making choices implies the existence of costs.
opportunity cost The value of the next best alternative that is forgone when one alternative
is chosen
Production possibilities boundary a curve showing which alternative combinations of
output can be attained if all available resources are used efficiently; it is the boundary between
attainable and unattainable output combinations
resource allocation the allocation of an economy's scarce resources among alternative uses
