Key to Eercieses.docVIP

Key to Exercises Chapter 1 I. Please give the definitions of the key terms Economics: Economics is the scientific study of the production, distribution, and consumption of goods and services. It is a science because it is an organized body of knowledge coordinated, arranged, and systematized according to certain general laws and principles. Microeconomics: Microeconomics focuses on individual markets and decisions by individual households and firms. It applies the principle of supply and demand, investigates how the price for a product is determined, studies how individuals decide where to work and assess similar factors. Macroeconomics: The study of the economy in the large is called macroeconomics. Macroeconomics treats the economy as a whole. It deals with the aggregates of economics, including total production, total employment, and general price level. GDP: Gross domestic product shows the value of final goods and services produced by factors of production within a country in one year’s time. Money: Money is a medium of exchange, a unit of value, and a store of value II. Please answer the following questions briefly. What does macroeconomics focus on? Macroeconomics focuses on the economy as a whole. It deals with the aggregates of economics, including total production, total employment, and general price level. What are the four major components of GDP? GDP consists of four parts: GDP = C+G+I+(X-M) C: personal consumption of goods and services G: government expenditures for goods and services I: investment X-M: net exports of goods and services (Exports - Imports) What are the functions of money? The three functions of money money is a medium of exchange money is a unit of value money is a store of value III. Economists use more professional expressions than ordinary people to describe economic situation. Please match the expressions of the similar meaning. 1 ?a ;2 ?c; 3 ?d; 4 ?e; 5 ?b f valIV. Choose one of the four choices t