The 10 Principles Of Economics

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Questions: 10 | Attempts: 4,094

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The 10 Principles Of Economics - Quiz

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Questions and Answers
  • 1. 

    Principle 1:  People face _________.

    Explanation
    The principle states that individuals are confronted with trade-offs. This means that when making decisions or choices, people often have to give up one thing in order to gain another. In other words, individuals cannot have everything they want and must make choices based on their priorities and the limited resources available to them. This principle recognizes the reality that individuals have to make sacrifices and prioritize their needs and wants in order to make the best possible decisions.

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  • 2. 

    Principle 2:  The cost of something is what you ______   ____  to get it.

    Explanation
    This principle states that the cost of something is determined by what you have to sacrifice or give up in order to obtain it. In other words, the true cost of something is not just its monetary value, but also the resources, time, or opportunities that you have to forgo in order to acquire it. This principle emphasizes the importance of considering all the factors involved in a decision, rather than just focusing on the immediate price tag.

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  • 3. 

    Principle 3:  Rational people think at the ________.

    Explanation
    Rational people think at the margin means that they consider the additional or incremental benefits and costs of a decision. They analyze the extra benefit they will receive from a particular choice compared to the extra cost they will incur. This principle suggests that rational decision-making involves weighing the pros and cons of each option and choosing the one that provides the greatest net benefit. By thinking at the margin, individuals can make more informed and efficient decisions.

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  • 4. 

    Principle 5: Trade can make ________ better off. 

    Explanation
    Trade can make everyone better off because it allows individuals and countries to specialize in producing goods and services that they have a comparative advantage in. This leads to increased efficiency and productivity, as resources are allocated more effectively. Through trade, individuals can access a wider variety of goods and services at lower prices, improving their overall well-being. Additionally, trade promotes economic growth by fostering competition, innovation, and the transfer of knowledge and technology. Ultimately, trade benefits all parties involved by creating opportunities for mutually beneficial exchanges and promoting overall prosperity.

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  • 5. 

    Principle 6:  Markets are usually a good way to organize ________  _________.

    Explanation
    Markets are usually a good way to organize economic activity because they provide a platform for buyers and sellers to interact and exchange goods and services. Through the mechanism of supply and demand, markets allocate resources efficiently, determine prices, and promote competition. This allows for the efficient allocation of resources, encourages innovation and entrepreneurship, and ultimately leads to economic growth and prosperity.

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  • 6. 

    Principle 7:  Governments can sometimes ________ market outcomes.

    Explanation
    According to Principle 7, governments have the ability to improve market outcomes. This means that they can intervene in the market to make it function better or more efficiently. This can be done through various means such as implementing regulations, providing public goods, correcting market failures, and promoting competition. By doing so, governments can enhance the overall performance and effectiveness of the market, leading to better outcomes for consumers and society as a whole.

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  • 7. 

    Principal 8:  A country's standard of living depends on its ability to ________  _______  ___ _________.

    Explanation
    A country's standard of living depends on its ability to produce goods and services. This is because the production of goods and services leads to economic growth and development, which in turn improves the overall quality of life for the country's citizens. When a country can effectively produce goods and services, it can generate income, create jobs, and provide essential goods and services to meet the needs of its population. This ultimately contributes to higher standards of living, as individuals have access to better healthcare, education, infrastructure, and other necessities for a comfortable life.

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  • 8. 

    Principal 9:  Prices  _____ when the government prints too much money.

    Explanation
    When the government prints too much money, it leads to an increase in the money supply in the economy. This increase in the money supply causes inflation, which is a general rise in prices. Therefore, the correct answer is "rise".

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  • 9. 

    Principal 10:  Society faces a short-run trade-off between __________ and unemployment.

    Explanation
    Society faces a short-run trade-off between inflation and unemployment. This means that when inflation is low, unemployment tends to be high and vice versa. This trade-off is known as the Phillips curve, which suggests that there is an inverse relationship between inflation and unemployment in the short run. When the economy is growing rapidly and demand for goods and services is high, inflation tends to rise while unemployment falls. Conversely, during a recession, inflation tends to be low while unemployment rises. This trade-off highlights the challenges policymakers face in managing both inflation and unemployment in the economy.

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  • 10. 

    Principle 4:  People respond to ________.

    Explanation
    Principle 4 states that people respond to incentives. This means that individuals are motivated to take certain actions or make certain choices based on the potential rewards or benefits they will receive. Incentives can be in the form of monetary rewards, recognition, promotions, or any other positive outcome that drives individuals to act in a certain way. By understanding this principle, organizations and individuals can design effective strategies and systems that align with people's motivations and encourage desired behaviors.

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  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 25, 2015
    Quiz Created by
    Kgrover
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