Short-Answer Quiz

Instructions: Provide a concise answer (2-3 sentences) for each of the following questions based on the provided source material.

1. What is the basic economic problem, and what three factors of production must be allocated to address it?
2. Explain the difference between comparative advantage and absolute advantage.
3. Identify and briefly describe three of the six determinants of demand.
4. What are the key characteristics of a perfectly competitive market structure?
5. Distinguish between a price floor and a price ceiling, and state what makes each one effective.
6. What is Gross Domestic Product (GDP), and what are two types of transactions that are excluded from its calculation?
7. Explain the difference between expansionary and contractionary fiscal policy, including the tools used for each.
8. What are the three primary tools of monetary policy used by the Federal Reserve to control the money supply?
9. Define a negative externality (or spillover cost) and explain how it represents a market failure.
10. Differentiate between the M1 and M2 measures of the money supply.