Unit 1: Fundamental Concepts

What’s in This Chapter? In this unit, we define economics and describe fundamental economic concepts. We study economics to explain important economic relationships and to determine how to best improve a nation’s...

The Definition of Economics What is economics? Is it the study of money? Is it about trade-offs and scarce resources? Is it about inflation, unemployment, and government budget deficits? Is it about eliminating poverty? All of...

Production Choices A country’s standard of living is in great part determined by its ability and effectiveness to produce. In order to produce, a country must use its resources, including land, labor, capital, and raw...

Causes of Economic Growth Economic growth occurs when the economy realizes greater production levels. In the graph below, the production possibilities curve shifts outward to the right (for instance, through point F), so that...

The Simple Circular Flow Model In its simplest form, an economy consists of buyers and sellers. Sellers are businesses that obtain resources, including land, labor, capital goods, and raw materials and use these to produce and...

The Three Economic Systems 1. A laissez-faire economy. Laissez-faire is French for “let do.” It means “hands-off” and represents a pure capitalist system, or a so-called price system, in which the supply...

In this section we clarify several concepts that we will come across throughout our text. Nominal and Real Values Nominal values, such as nominal prices, nominal earnings, nominal wages, nominal interest rates, and nominal Gross...

Question Everything Critical thinking is particularly important in today’s Internet society and world of information overload and fake news. Authors, journalists, economists, politicians, talk-show hosts and even Hollywood...

Time limit: 0 Quiz-summary 0 of 10 questions completed Questions: 1 2 3 4 5 6 7 8 9 10 Information This is a ten question multiple-choice quiz covering the material in this Unit. I hope you do well! You have already completed...