Macroeconomics Jeopardy

This economic problem arises because human wants are unlimited while the resources available to satisfy them are limited.

What is scarcity?

This cost represents the value of the next-best alternative given up when a choice is made.

What is opportunity cost?

This curve illustrates the maximum combinations of two goods an economy can produce with its available resources and technology.

What is the production possibilities curve?

This economic system relies primarily on supply, demand, and prices, rather than government planning, to allocate resources.

What is a market economy?

This concept describes an economy operating on its production possibilities frontier, unable to produce more of one good without producing less of another.

What is productive efficiency?

This measure totals the market value of all final goods and services produced within a country in a given period.

What is gross domestic product?

This adjustment removes the effect of price changes so that GDP can be compared meaningfully across years.

What is real GDP?

This component of GDP includes spending by businesses on things like machinery, buildings, and inventories.

What is investment?

This measure divides real GDP by the population to approximate average economic well-being per person.

What is GDP per capita?

This pattern of alternating expansion and contraction in economic activity defines this recurring cycle.

What is the business cycle?

This type of unemployment results from the normal, short-term process of workers searching for or transitioning between jobs.

What is frictional unemployment?

This type of unemployment arises when workers' skills no longer match the jobs available, often due to technological change.

What is structural unemployment?

This sustained rise in the general price level reduces the purchasing power of money over time.

What is inflation?

This index tracks the average price of a fixed basket of consumer goods and services over time.

What is the Consumer Price Index?

This economic condition combines stagnant growth, high unemployment, and high inflation all at once.

What is stagflation?

This branch of policy uses government spending and taxation to influence the overall economy.

What is fiscal policy?

This situation occurs when government spending in a given year exceeds government revenue.

What is a budget deficit?

This total amount a government owes, accumulated from years of budget deficits, describes its accumulated obligations.

What is the national debt?

This effect describes how an initial change in spending leads to a larger overall change in total economic output.

What is the spending multiplier?

This type of fiscal policy, such as unemployment insurance, automatically expands or contracts without new legislation as the economy changes.

What is an automatic stabilizer?

This institution serves as the central bank of the United States.

What is the Federal Reserve?

This tool of monetary policy involves the central bank buying or selling government securities to influence the money supply.

What are open market operations?

This interest rate is charged on overnight loans between banks holding funds at the Federal Reserve.

What is the federal funds rate?

This fraction of deposits that banks must hold in reserve rather than lend out is set by the central bank.

What is the reserve requirement?

This type of monetary policy increases the money supply and lowers interest rates to stimulate a sluggish economy.

What is expansionary monetary policy?

This principle holds that countries gain by specializing in producing goods for which they have a lower opportunity cost.

What is comparative advantage?

This tax imposed on imported goods raises their price and can protect domestic industries.

What is a tariff?

This numerical limit on the quantity of a good that may be imported during a given period restricts trade more directly than a tariff.

What is a quota?

This account records the difference between a country's exports and imports of goods and services.

What is the balance of trade?

This value expresses how much one country's currency is worth in terms of another country's currency.

What is the exchange rate?