Davora Mae J.

Lopez BSED – SS3

SELF ASSESSMENT EXERCISE NO. 1

Briefly discuss basic concepts in economics presented in the review lesson.

Because of scarcity every society or economic system must answer these three (3)
basic questions: What should we produce? How should we produce it? For whom
should we produce it? Elaborate how these three (3) basic economic questions could
solve the problem in scarcity.

 An economy has to decide, which consumer goods (rice, wheat, clothes, etc.) and
which of the capital goods (machinery, equipment's, etc.) are to be produced. In the
same way, economy has to make a choice between civil goods (bread, butter, etc.).
The quantity in which a commodity is to be produced is set at that level where
demand equals supply. If quality produced is more or less, then there will be dis
equilibrium in the market and price will fluctuate. Hence, to maintain stable
equilibrium price it becomes necessary to make demand and supply equal. This
situation requires people to make decisions about how to allocate resources
efficiently, in order to satisfy basic needs and as many additional wants as possible.
ADVERTISEMENTS: In nutshell, an economy has to allocate its resources and choose
from different potential bundles of goods (What to produce), select from different
techniques of production (How to produce), and decide in the end, who will
consume the goods (For whom to produce).
Another method the governments use to solve the problem of scarcity is by raising
prices, but they must make sure that even the poorest consumers can afford to buy
it. It can also ask certain firms to increase their production of scarce resources or to
expand (using more factors of production).
 SELF ASSESSMENT EXERCISE NO.2

Direction: This will be included in your Study Guide compilation. Answer the
questions below comprehensively.

Define what is Macroeconomics.

 The study of economic activity by looking at the economy as a whole.
Macroeconomics analyzes overall economic issues such as employment, inflation,
productivity, interest rates, the foreign trade deficit, and the federal budget deficit.
Enumerate concerned topics under the study of Macroeconomics.
 Macroeconomists study topics such as GDP, unemployment (including
unemployment rates), national income, price indices, output, consumption, inflation,
saving, investment, energy, international trade, and international finance.
Explain comprehensively what is Capitalist Economy.
 Capitalism is an economic system in which private individuals or businesses own
capital goods. The production of goods and services is based on supply and demand
in the general market—known as a market economy—rather than through central
planning—known as a planned economy or command economy.
Who is John Maynard Keynes? Explain his contribution to macroeconomics.
 John Maynard Keynes was an economic analyst in the India Office, a teacher at
Cambridge, the de facto financial manager of Britain's war effort during World War
I, and (in an unpaid capacity) the country's chief economic representative to the
United States. His most important work, The General Theory of Employment,
Interest and Money (1935–36), advocated a remedy for economic recession based
on a government-sponsored policy of full employment.
How did John Maynard Keynes define economics?
 Keynesian economics is considered a "demand-side" theory that focuses on changes
in the economy over the short run. Based on his theory, Keynes advocated for
increased government expenditures and lower taxes to stimulate demand and pull
the global economy out of the depression.
Explain the Keynesian model of the economy.
 Keynesian economics is a macroeconomic economic theory of total spending in the
economy and its effects on output, employment, and inflation. Based on his theory,
 Keynes advocated for increased government expenditures and lower taxes to
stimulate demand and pull the global economy out of the depression.

SELF ASSESSMENT EXERCISES NO.3

Activity
“MY CIRCULAR FLOW DIAGRAM”

Direction: Using your creativity and artistic skill, in 1/2 size cartolina or tagboard
make a diagram of the “Circular Flow Model of the Economy”.

GUIDE QUESTIONS:

Answer the following questions below in an A4 or short size bond paper. Keep your
answer for compilation in your STUDY GUIDE.
1. What is the circular flow diagram?
 The circular-flow diagram (or circular-flow model) is a graphical representation of
the flows of goods and money between two distinct parts of the economy. In other
words, is the place where firms sell the goods and services they have produced,
receiving a revenue paid by households.
2. What are the 4 main parts of the circular flow diagram?
 In economics, the circular flow diagram represents the organization of an economy
in a simple economic model. This diagram contains, households, firms, markets for
factors of production, and markets for goods and services
3. What are the three parts/phases of the circular flow model?
 Production phase, income phase and expenditure phase.
4. How does circular flow diagram works?
 The circular flow model demonstrates how money moves through society. Money
flows from producers to workers as wages and flows back to producers as payment
for products. In short, an economy is an endless circular flow of money.
5. What do circular flow diagrams show?
 A circular flow diagram represents how goods, services, and money move through
our economy. Households then offer land, labor, and capital (known as factors) to
firms so that they can then produce the goods and services.

SELF ASSESSMENT EXERCISE NO. 4

General Direction:
Copy and answer the questions that follow in your STUDY GUIDE. Write the correct
response on the space provided every after each question.
I. Multiple Choice
1. In a traditional economic system people usually exchange goods or services rather than
use money. Which of the following is an example of this exchange process?
answer choices
A. Charging goods on a credit card
B. Using currency to pay
C. Bartering with a seller
D. Paying for services by sell
Answer: C. Bartering with a seller.
2. A market economy is very different from a command economy. Which of the following is
found in a market economy?
answer choices
A. Guaranteed yearly pay raises
B. Government control of agriculture
C. competition
D. government control of industry
Answer: C. Competition.
3. The economic system of communist countries is most closely related to which of the
following?
answer choices
A. market
B. command
C. traditional
 D. supply and demand
Answer: B. Command.
4. When a country has a market economy, which of these statements correctly defines this
system?
answer choices
A. workers are guaranteed a pay raise every year
B. the gov’t controls most of the business in the country
C. all basic goods are provided without charge
D. companies produce goods of their choice and consumers decide whether to buy them
Answer: B. The gov’t controls most of the business in the country.
5. Which of the following would reflect a country with a mixed economy?
answer choices
A. prices and wages are solely regulated by the government
B. a combination of privately-owned industry and government control.
C. A country’s distribution of resources is based on inheritance
D. Prices and wages are determined by supply and demand only
Answer: B. A combination of privately – owned industry and government control.
6. Economic system based on traditions and social customs
answer choices
A. economic system
B. traditional
C. supply and demand
D. market
Answer: B. Traditional.
7. Economic system based on supply and demand, instead of government regulation
answer choices
A. Market
B. Traditional
C. Command
D. Mixed
Answer: A. Market
8.Economic system that combines qualities of market and command systems into one
answer choices
A. Mixed
B. Market
C. Command
D. Traditional
Answer: A. Mixed
9. Which trade barrier discourages trade by placing a tax on foreign goods?
answer choices
A. Tariff
B. Embargo
C. Debt
D. Quota
Answer: A. Tariff.
10. What is the purpose of a tariff?
answer choices
A. Increase the prices of imported goods to protect domestic industry
B. Increase the prices of exported goods to protect domestic industry
C. Limit trade
D. Block trade
Answer: A. Increase the prices of imported goods to protect domestic industry.
11. Limit on an import
answer choices
A. tariff
B. quota
C. embargo
D. specialization
Answer: B. Quota.

12. A tax on an import

answer choices
A. tariff
B. quota
C. embargo
 D. specialization
Answer: A. Tariff
13. A block on trade
answer choices
A. embargo
B. quota
C. specialization
D. trade
Answer: A. Embargo.
14. Exchanging goods between countries
answer choices
A. international trade
B. specialization
C. embargo
D. quota
Answer: A. International Trade.
15. The division of labor; work is divided into parts for workers, factories or countries to
become expert at producing certain goods
answer choices
A. specialization
B. trade
C. quota
D. traditional
Answer: A. Specialization.
 II. GRAPHIC ORGANIZER
Direction: With the use of a graphic organizer, show the characteristics, advantages and
dis-advantages of the 4 types of Market Systems.

THE FOUR TYPES OF MARKET

Perfect Monopolistic
competition Monopoly Oligopoly Competition

Characteristic: Characteristic: Characteristic: Characteristic:

1.No company Profit maximizer, Few Firms with large Many buyers and
holds a substantial price maker, high market share, high sellers, maximize
market. 2. The barriers to entry, barriers to entry, profits, low barriers
industry output is single seller, and interdependence, to entry and exit,
standardized. 3. price each firm has little supernormal profit in
There is freedom of discrimination. market power in its the short term,
entry and exit. own right, higher normal profits in the
price. long run.

Pros:
Achieve the Pros:
Pros: Pros:
maximum consumer
surplus and economic Low level of Products
Encourage R and
welfare, perfect competition and differentiated, firms
D, innovation and
knowledge is receive big profits has some control
economics of scale
available so there is and better-quality over price and
can be gained.
no information failure support. products could be
and allocate highly differentiated.
resources in the most
efficient way.

Cons: Cons: Cons:

Products are the Exploitation of Limited customer Cons:
same and not consumer higher choice and high
branded and no prices, potential for High barriers to
barriers and
chance to achieve supply to be limited entry, potential
companies are not
maximum profit less choice and for conspiracy
interested in
because many firms potential for and abnormal
innovation
are selling the same inefficiency. profits.
because
products.
competition is low.