Economics is about the management of scarce resources. The economic system under which a system operates determines what gets produced, how much gets produced, and who gets it.

Robert Redford created The Sundance Film Festival, where talented, young directors and producers can submit their films for review and possible screening. The festival attracts thousands of tourists each year, employs many others at various capacities, and provides important exposure to up-and-coming artists who may otherwise not be able to get their works noticed. Ultimately, the festival provides social and economic benefit for many. Adam Smith believed that one’s self-directed gain would eventually create prosperity for many, and called the process the ___________.

The Invisible Hand concept refers to how one’s self-directed gain can eventually lead to social and economic benefit for others. This concept was first described by political economist Adam Smith.

The foundation of the U.S. economic system is considered to be:

A major part of the United States’ business success in the past was due to an economic and social climate that allowed most businesses to operate freely. This freedom is based within capitalism.

At a young age, Eliza’s coaches were confident she had the potential to be a world-class swimmer. They encouraged her parents to do as much as they could to further develop her skills, because a future in Olympic swimming could set her up for life, including promotional endorsements and coaching positions when her competitive days were over. After four years on an athletic scholarship and Olympic experience under her belt, she chose a different path. With her savings and personal connections, she rented a corner building in a bustling San Francisco neighborhood and pursued her dream: a surf shop business. After several successful years, Eliza was certain that Adam Smith would smile because ______________.

Adam Smith believed that a capitalistic system would be beneficial, as long as society embraced four basic rights. One of those rights was the freedom of choice, meaning the freedom to choose the type of business or profession to pursue.

Which of the following best describes a capitalistic nation?

In a political and economic system known as capitalism, most or all of the factors of production and distribution are privately owned and operated for a profit. This means that businesses are privately owned by one or more persons or stockholders.

What’s going on here? As soon as Dewey Cheatum and Howe Motors increase the prices on their SUVs, then so does their only competitor, You Betcha Motors! Their prices are basically the same for similar vehicles, although their advertising says their products are really very different. What kind competition exists here?

An oligopoly is a degree of competition in which just a few sellers dominate the market, like Dewey Cheatum & Howe Motors and You Betcha Motors.

Jason’s mom specifically asked for a CIP cast iron pan for her birthday. As Jason scanned the stock in two department stores, he found ten different brands, none of which were CIP. When he found CIP in a kitchen specialty shop, he was challenged to tell the difference between his mom’s choice and the others. In his business class, he learned about ______________, where many sellers may be offering very similar products. Through various means, each seller differentiates his product from the competition.

Monopolistic competition is defined by many sellers who sell very similar products, but are able to differentiate from the competition through advertising and branding.

You studied for two hours each day, for an entire week, before your first marketing exam. When you turned in the test, you felt confident that your effort would pay off. At the next class meeting, your instructor said she was considering curving the grades because the class average was lower than she had anticipated. All of a sudden, your 98% score did not have the same impact that it did when you first saw it! Now the guy next to you that got an 84% is likely to have an “A” grade too. As you analyze this situation, you realize that it parallels an economic system such as ________________, where even if you work harder than another person, you are likely to realize the same benefit.

The premise of socialism is that wealth should be more evenly distributed among people. Socialistic nations provide more government-funded services for society.

Citizens of socialist nations can rely on the government to provide all of the following except:

Money collected from citizens in socialist nations is used for education, health care, child care, and providing for the people in the country. Money is not spent to create new businesses.

___________________are economic systems where some allocation of resources is made by the market and some by the government.

Mixed economies are economic systems where some allocation of resources is made by the market and some by the government.

For the last several years, the country of Amerensia has been moving from a communist country to a more mixed economic system. Which of the following most likely would not occur in Amerensia?

As countries move from a more communist-based economic system, government control will loosen.

In order for the value of goods and services to be counted as part of a nation’s gross domestic product, the goods and services must be ___________.

GDP is the total value of final goods and services produced within the physical boundaries of a particular nation in one year.

The following chart reflects the U.S.’s recent GDP (Gross Domestic Product). Which of the following statements best reflects the health of the U.S. economy during this time period?

2006

$12.96 trillion

2007

$13.21 trillion

2008

$13.16 trillion

2009

$12.70 trillion

2010

$13.09 trillion

2011

$14.29 trillion

2012

$16.44 trillion

2013

$16.72 trillion

Two consecutive quarterly declines in GDP constitute a recession. The annual decline of GDP realized in 2008 and 2009 indicated that the economy was in recession.

The U.S. unemployment rate is a key economic indicator because most of us need jobs to maintain our standard of living. A criterion used to calculate the unemployment rate is _________.

The unemployment rate is defined as the number of persons age 16 and over who do not have jobs, and who have been looking for work during the past four weeks.

The CPI (consumer price index) measures ________________ and ________________.

The consumer price index is a measurement of inflation and deflation. The market basket of goods that is regularly measured includes housing, energy, food, apparel, and medical care.

At Six City Wellness Center, Greg operates a new state-of-the-art MRI scanner that serves approximately 10 patients during his 8-hour shift. Patients are scheduled for various lengths of time, depending on which part(s) of their body requires scanning. The image quality is significantly superior to what it was on previous scanners, but the number of patients served per day remains the same. This situation attests to the fact that ____________.

Although technology has improved the quality of tools that we use to provide services in the service sector, the number of customers that we can serve in a fixed time period has not significantly improved.

Which of the following is not a part of the business cycles that occur in economies over time?

The business cycles are (1) an economic boom, (2) recession, (3) depression, and (4) recovery.

The American Society of Civil Engineers published a report card for America’s interstates. It was reported that road repairs cost the American taxpayers $67 billion per year. Through the enactment of ___________, the U.S. government collects tax dollars and then spends some of these funds to maintain the infrastructure of the nation. Increasing taxes has the effect of drawing money away from the private sector.

Fiscal policy refers to the federal government?s efforts to keep the economy stable by increasing or decreasing taxes. Increasing taxes draws money away from the private sector and puts it in the hands of the government.

The sum of all the federal deficits over time is known as the:

The national debt is the sum of all government deficits over time.

Imagine the following: New sources of energy have become marketable and the industries involved have hired thousands to operate the emergence of new businesses. Construction companies cannot build homes fast enough for workers in the energy industry. Due to increasing salaries in several other industries that partner with energy companies, the demand for everything from food to entertainment to travel has increased. High demand has brought about shortages in some product categories. To help manage the situation in the short term, ___________.

The Fed open market committee makes decisions to raise or lower the interest rate known as the federal funds rate. This is the rate that the Federal Reserve charges member banks to borrow funds. Member banks pass along the higher or lower interest rate charges to their clients. If the Fed believes that the economy is growing too quickly and demand for several product categories is forcing prices to increase too rapidly, it may decide to tighten the money supply by increasing interest rates.