Page 137 - ABCTE Study Guide_Neat

The United States dollar (USD) is a very important unit currency in the world economy. Its movements
affect financial matters across the globe, but fluctuations in the price of the dollar on the world market are
most significant to the U.S. economy. As the value of the dollar drops, the United States loses influence in
the global economy and some of its avenues for international business. Imported goods become more
expensive while exports drop in price. A rising dollar has exactly the opposite effect: more international
influence and cheaper imports, with exports going at a higher rate. The quality of life in any capitalist
country participating in a world economy is very closely related to the perceived quality of its currency in
that economy.

Question

A consumer is willing to buy four compact discs for $15 but will buy six if the discs are priced at $12 per
piece. Which economic force is being described in this scenario?

A Demand

B Price indexing

C Supply

D Scarcity

Answer

The correct answer is A. Demand affects the price of something that a consumer is not only willing to buy
but also has the capacity to buy (depending on the price).

Review

• An economy is characterized by production, consumption, and exchange.
• Forces such as supply and demand have dramatic effects on production, costs, wages,
and other economic factors.
• Gross domestic product (GDP) is the measure of the value of economic production of a
country.
• Market economies exist where goods and services are traded freely among citizens
according to their exchange values.
• Adam Smith was an economic philosopher who is credited with many of the ideas
underlying capitalism.

Geography

Lesson Objective

The upcoming lesson will cover some geographic basics, including location of continents, certain
nations, and major geographic features, such as mountains, seas, oceans, rivers, and grasslands.