The Problem Of Scarcity

2.1. (a) What are economic resources (b) Explain the meaning of (1) land, (2) capital, and (3) labor as used in economics. (a) Economic resources consist of land (natural resources), capital (human-made resources), and labor (human resources). These resources are not free they command a price because they are scarce and are essential to the production of goods and services. (b) (1) Land consists of an economy's natural resources, gifts of nature such as minerals, forests, rivers, and...

The Balance Of Payments

23.11. (a) What is a nation's balance of payments What is its purpose (b) What are the three main accounts in the balance of payments What does each measure (c) How are credits and debits entered into the current and capital accounts (a) A nation's balance of payments is a summary record of all the transactions of a nation with the rest of the world during a calendar year. Its main purpose is to inform government authorities of the nation's international position and to help them formulate...

Government And Price Determination

3.22. (a) What is a price ceiling (b) Why did some local government units impose rent-control laws which placed ceilings on housing rentals (a) A price ceiling is a government-mandated price that exists below the market's equilibrium price price ceilings result in shortages. (b) The purpose of rent-control laws was to reduce housing costs for lower-income households. Such laws, while well-intentioned, had harmful effects over time. When rental prices are set below the market's equilibrium...

International Trade and Finance

Most nations are open economies in the sense that they are connected to the rest of the world through a network of trade and financial relationships. Even though trade is generally more important to small countries than to large countries, the welfare of both is greatly dependent on trade. 2. Each nation can gain from trade by specializing in the production of the commodity in which it has a comparative advantage and trading some of this for the commodity of its comparative disadvantage. The...

The Subject Matter Of Economics

1.1. a Explain the statement Economics is a social science. b Why is the study of economics important a The social sciences study how society is organized and functions. Economics, sociology, anthropology, psychology, and political science are all social sciences. Each studies the organization and functioning of society from a particular point of view. Economics studies how individuals and organizations in society engage in the production, distribution, and consumption of goods and services. b...

The Federal Reserve System

Describe the Federal Reserve System. The Federal Reserve System consists of a Board of Governors, a Federal Open Market Committee, and 12 district Federal Reserve Banks with 24 branches throughout the United States. The seven-member Board of Governors, appointed by the President of the United States with the consent of the Senate , oversees the various central-bank supervisory functions. The 12-member Federal Open Market Committee, which includes the Board of Governors, is responsible for...

Multiple Choice Questions

Money as a measure of value provides a its holder with perfect liquidity, ,b a common denominator for measuring value, c a mechanism for allocating resources and distributing output, .d a medium for exchanging final output. 2. In the United States, paper currency issued by the Federal Reserve a is backed by gold but is not convertible into gold, b has no intrinsic value but is backed by gold, 3. In the United States, the M1 money supply consists of b paper currency, coins, and check-writing...

The Functions Of Money

9.1. a How does the use of money promote efficient production and help allocate good and services b Explain the importance of money's standard of value function to an economy. a Producers use money rather than commodities to pay for the services of economic resources. Owners of economic resources are thereby free to seek employment that maximizes their money income rather than employment that provides payment in specific commodities. This promotes the efficient use of limited economic...