How does government help in promoting property rights?
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By enforcing property rights.
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How does government help in promoting property rights?
By enforcing property rights.
What is an incentive?
Something that induces a person to act.
How do sellers determine how much to supply in a competitive market?
Sellers look at the price.
What shift have most countries that once had centrally planned economies made?
They have shifted toward market economies.
What will be developed in the coming chapters of Mankiw's Principles of Economics?
Specific insights about people, markets, and economies.
What is a goal of government intervention in markets?
To promote efficiency.
What is an opportunity cost?
Whatever must be given up to obtain some item.
What do countries enjoy as a result of trade?
A greater variety of goods and services.
How do rational people make decisions?
They think at the margin.
What does equality mean in the context of economics?
Distributing economic prosperity uniformly among the members of society.
What does Principle 2 of Mankiw's Principles of Economics state?
The cost of something is what you give up to get it.
What is the role of prices in a market economy?
Prices direct economic activity through the invisible hand.
How do rational people make decisions?
By evaluating costs and benefits of marginal changes.
When should a rational person take action?
When marginal benefits are greater than marginal costs.
What happens to prices when the government prints too much money?
Prices rise.
What is the cost of something?
What you give up to get it.
What trade-off does society face in the short run?
A trade-off between inflation and unemployment.
What principle states that prices rise when the government prints too much money?
Principle 9.
What is Principle 7 in Mankiw's Principles of Economics?
Governments can sometimes improve market outcomes.
What is one role of government in market outcomes?
To enforce rules.
What advantage do countries gain from trade?
Countries can specialize in what they do best.
What was the average income in Nigeria in 2019?
$5,000.
How much greater is the U.S. standard of living today compared to 100 years ago?
Eight times greater.
What does a country's standard of living depend on?
Its ability to produce goods and services.
What is one indicator of economic performance?
The growth in average income.
What does market power refer to?
The ability to unduly influence market prices.
What is the short-run trade-off that society faces according to Principle 10?
Between inflation and unemployment.
What can be a consequence of incentives?
They can have unintended consequences.
What is a marginal change?
A small incremental adjustment to a plan of action.
What does the price in a competitive market reflect?
The sellers’ costs of production and the value of the good to the buyers.
In a market economy, who decides where to work and what to buy?
Households decide where to work and what to buy with their incomes.
What do people face when making decisions?
Trade-offs.
How can governments affect market outcomes?
Governments can sometimes improve market outcomes.
What do people need to do when facing trade-offs?
Compare costs and benefits of alternatives and include opportunity costs.
How do buyers and sellers respond to higher prices?
Buyers consume less, and sellers produce more.
What does the principle 'People Face Trade-Offs' imply?
To get one thing you want, you usually must give up another thing you want.
What is inflation?
An increase in the overall level of prices in the economy.
What is economics all about?
Economics studies how individuals and societies allocate scarce resources to satisfy their needs and wants.
How do people benefit from trade?
They can buy a greater variety of goods and services at lower cost.
What was the average income in the U.S. in 2019?
$65,000.
What is the effect of higher demand on firms?
Firms raise prices, hire more workers, and produce a larger quantity of goods and services.
How do rational people make decisions?
By comparing costs and benefits.
What is the main focus of the section titled 'How People Interact'?
It discusses the principles of interaction among individuals in an economy.
What is one benefit of trade?
Trade can make everyone better off.
What is meant by 'No free lunch' in economics?
It means that to obtain something, you must sacrifice something else.
What is the impact of high inflation on society?
It imposes various costs on society.
What foundational concepts will be referred to in the upcoming chapters?
The Ten Principles of Economics.
What does a country's standard of living depend on?
Its ability to produce goods and services.
What is the relationship between hiring and unemployment in the context of increased money growth?
More hiring leads to lower unemployment.
What is almost all variation in living standards around the world attributable to?
Differences in countries’ productivity.
How do people generally respond to incentives?
They respond to incentives.
How is the concept of equality related to the economic pie?
It refers to how evenly the pie is divided into individual slices.
Which principle of economics relates to decision making in daily life?
The principle of opportunity cost, which states that the cost of any action is the value of the next best alternative forgone.
How are markets generally viewed in organizing economic activity?
Markets are usually a good way to organize economic activity.
What is a key aspect of making decisions according to the principle of trade-offs?
Trading off one goal against another.
What does the fraction of the population that cannot find work indicate?
The unemployment rate.
What do economists analyze?
Forces and trends that affect the overall economy.
What is an example of scarcity mentioned in the activity?
Time, due to balancing work and school.
In addition to efficiency, what other aspect does government aim to promote?
Equality.
What happens when money growth increases in the short run?
It stimulates the overall level of spending and demand for goods and services.
What do buyers consider when deciding how much to demand?
Buyers look at the price.
What is the goal of economic policymakers regarding inflation?
To keep inflation at a reasonable rate.
What is the main idea of Principle 5 in Mankiw's Principles of Economics?
Trade can make everyone better off.
What do rational people do according to Principle 3?
They systematically and purposefully do the best they can to achieve their goals, given the available opportunities.
What is the main principle discussed in Principle 6 of Mankiw's Principles of Economics?
Markets are usually a good way to organize economic activity.
In a market economy, who makes the decisions regarding hiring and production?
Firms make decisions about whom to hire and what to make.
What is meant by the size of the economic pie?
It refers to the total output or wealth generated in an economy.
What does the principle of efficiency refer to in economics?
Society is getting the most it can from its scarce resources.
How does scarcity influence decisions?
Scarcity forces individuals to make choices about resource allocation.
What is opportunity cost?
The value of the next best alternative that is forgone when making a decision.
What economic factor is measured by the rate at which prices are rising?
Inflation.
What does economics study?
How society manages its scarce resources.
How can terms of trade lead to gains?
By allowing parties to specialize and trade, leading to increased overall efficiency and benefits.
What is marginal analysis?
A method of evaluating the additional benefits of an action compared to the additional costs.
