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Economic Review Questions

1. Define the term microeconomics.

2. Define the term macroeconomics.

3. Define the abbreviation SEC and define what it does.

4. Define the abbreviation FDIC and define what it does.

5. Define the term laissez-faire in terms of economics.

6. Define GDP and explain what it is.

7. Define inflation.

8. Define the scarce means of production and explain why they are scarce.

9. Explain how one can increase production potential.

10. Explain why the Social Security tax be considered a regressive tax.

Solution Preview

1. Microeconomics is that branch of economics which deals with the allocation of scarce resources. This is done in free markets by prices, which are determined by supply and demand.

2. Macroeconomics is based on microeconomics. It uses price theory to determine how the economy will behavior in different circumstances. It makes predictions about national income, unemployment, and inflation.

3. The Securities and Exchange Commission oversees financial markets. It requires that those selling investments are honest about the risk involved. It requires that companies divulge financial information, thus enabling prices to be determined by information which is known to all participants. This allows for efficient markets.

4. The Federal Deposit ...