ECN211 Exam 1 Review ASU with Complete Solutions

ECN211 Exam 1 Review ASU with Complete Solutions Ten Principes - Correct Answer Principle 1: People face tradeoffs Principle 2: The cost of something what you give up getting it Principle 3: Rational people think at the margin Principle 4: People respond to incentives Principle 5: Trade can make everyone better off Principle 6: Markets are usually a good way to organize economic Principle 7: Government can sometimes improve market outcomes Principle 8: A country's standard of living depends on its ability to produce goods and services Principle 9: Prices rise when government prints too much money Principle 10: Society faces a short-run trade off between inflation and unemployment First 4 principles have to do with what? - Correct Answer How people make descisions What do the last 4 principles have to do with? - Correct Answer Productivity are the ultimate source of living Scarcity - Correct Answer The limited nature of society's resources Economics - Correct Answer The study of how society manages its scarce resources The economist plays 2 roles - Correct Answer Scientist: Trying to explain the world Policy Advisers: Trying to improve the world Circular-flow diagram is what? - Correct Answer A visual model of the economy, slows how dollars and goods and services flow through markets among households and firms