lOMoAR cPSD| 61371432
WGU D089 Study Guide | Complete study Questions and
Answers complete Solutions | A+ Graded | 2026 Updates
| 100% correct
Module 1 – The Economic Way of Thinking
1. Three fundamental questions + example “What” question
• What to produce?
• How to produce it?
• For whom to produce?
Example “What” question: “Should we use our resources to build more roads or more
schools?”
2. “Think at the margin”
People compare the extra (marginal) benefit of one more unit of something to the extra
(marginal) cost, and only do it if MB ≥ MC.
3. What determines a nation’s standard of living?
Long-run standard of living is driven mainly by productivity—output per worker (or per hour).
4. Why trade is beneficial (10 Principles)
Trade lets people/countries specialize in what they’re relatively best at (comparative advantage),
increasing total output so everyone can be better off than in isolation.
5. How printing money impacts prices
If the money supply grows much faster than real output, you get inflation—a persistent increase
in the overall price level.
6. Traditional vs Market economy
• Traditional: Decisions based on customs and traditions; very little innovation; low
growth.
• Market: Decisions made by decentralized buyers and sellers using prices; private
property and profit motive drive innovation and efficiency.
7. Two disadvantages of a Command economy
, lOMoAR cPSD| 61371432
• Central planners lack info → chronic shortages and surpluses. Weak incentives →
low productivity and poor quality.
8. One advantage of a Mixed economy
You get market efficiency and innovation, plus government intervention where markets fail
(public goods, externalities, social safety net).
9. Macroeconomics vs microeconomics
• Micro: Individual households, firms, specific markets.
• Macro: Economy-wide outcomes like GDP, unemployment, inflation, growth, policies.
10. Example of a normative statement
“The government should increase the minimum wage to reduce poverty.”
11. Payments to the four factors of production
• Land → Rent
• Labor → Wages/salaries
• Capital → Interest or capital income
• Entrepreneurship → Profit
Module 2 – The Economic Problem
1. Why scarcity matters
Resources are limited and wants are unlimited, so we must choose; every choice involves
opportunity cost.
2. What a budget constraint shows
All combinations of goods/services a consumer can afford given income and prices (points on or
inside the line are affordable).
3. Budget constraint vs PPF – 2 similarities, 2 differencesSimilar:
• Both show trade-offs between two goods. Slope shows opportunity cost.
Different:
• Budget line: based on income & prices; PPF: resources & technology.
• Budget line usually straight (constant OC); PPF usually bowed (increasing OC).
4. Trade-off from Point A to B on PPF
WGU D089 Study Guide | Complete study Questions and
Answers complete Solutions | A+ Graded | 2026 Updates
| 100% correct
Module 1 – The Economic Way of Thinking
1. Three fundamental questions + example “What” question
• What to produce?
• How to produce it?
• For whom to produce?
Example “What” question: “Should we use our resources to build more roads or more
schools?”
2. “Think at the margin”
People compare the extra (marginal) benefit of one more unit of something to the extra
(marginal) cost, and only do it if MB ≥ MC.
3. What determines a nation’s standard of living?
Long-run standard of living is driven mainly by productivity—output per worker (or per hour).
4. Why trade is beneficial (10 Principles)
Trade lets people/countries specialize in what they’re relatively best at (comparative advantage),
increasing total output so everyone can be better off than in isolation.
5. How printing money impacts prices
If the money supply grows much faster than real output, you get inflation—a persistent increase
in the overall price level.
6. Traditional vs Market economy
• Traditional: Decisions based on customs and traditions; very little innovation; low
growth.
• Market: Decisions made by decentralized buyers and sellers using prices; private
property and profit motive drive innovation and efficiency.
7. Two disadvantages of a Command economy
, lOMoAR cPSD| 61371432
• Central planners lack info → chronic shortages and surpluses. Weak incentives →
low productivity and poor quality.
8. One advantage of a Mixed economy
You get market efficiency and innovation, plus government intervention where markets fail
(public goods, externalities, social safety net).
9. Macroeconomics vs microeconomics
• Micro: Individual households, firms, specific markets.
• Macro: Economy-wide outcomes like GDP, unemployment, inflation, growth, policies.
10. Example of a normative statement
“The government should increase the minimum wage to reduce poverty.”
11. Payments to the four factors of production
• Land → Rent
• Labor → Wages/salaries
• Capital → Interest or capital income
• Entrepreneurship → Profit
Module 2 – The Economic Problem
1. Why scarcity matters
Resources are limited and wants are unlimited, so we must choose; every choice involves
opportunity cost.
2. What a budget constraint shows
All combinations of goods/services a consumer can afford given income and prices (points on or
inside the line are affordable).
3. Budget constraint vs PPF – 2 similarities, 2 differencesSimilar:
• Both show trade-offs between two goods. Slope shows opportunity cost.
Different:
• Budget line: based on income & prices; PPF: resources & technology.
• Budget line usually straight (constant OC); PPF usually bowed (increasing OC).
4. Trade-off from Point A to B on PPF
