Question: Microeconomics

Answer: study of the individual units that make up the economy

Question: Macroeconomics

Answer: the study of the overall aspects and workings of an economy- inflation, growth, employment, interest rates, and the productivity of the economy as a whole

Question: Scarcity

Answer: refers to the limited nature of society’s resources, given the society’s unlimited wants and needs.

Question: The Five Foundations of Economics

Answer: 1) Incentives

2) Trade-offs

3) Opportunity cost

4) Marginal thinking

5) Trade creates value

Question: Economics

Answer: is the study of how people allocate their limited resources to satisfy their nearly unlimited wants.

Question: Fiscal Policy

Answer: the government takes an active role in managing the economy

Question: Incentives

Answer: are factors that motivate a person to act or exert effort

Question: Positive Incentives

Answer: encourage action. End of year bonuses motivate employees to work hard throughout the year.

Question: Negative Incentives

Answer: also encourage action. The fear of receiving a speeding ticket keeps motorists from driving too fast.

Question: Direct Incentives

Answer: Cut my grass and I’ll pay you $30 dollars.