WGU D089 Study Guide Verified Study Review Complete Study
Solutions | A+ Graded | 2026 Updates | 100% correct
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer? Give an example of a
“What” question.
What to produce?
EX: A property owner has 500 acres of flat land and has been approached by two different
businesses. One business wants to drill for oil, and the other wants to raise cattle.
How it will be produced?
EX: A well-established company has been producing goods and wants to create a new line of
production. The company needs to decide whether it should use a current factory or find a
new location.
For whom the goods or services are produced?
EX: To address environmental concerns, Congress is considering a bill that would increase the
price of electricity generated by coal. Increasing the price of electricity creates a problem for
low-income households.
2. What do economists mean when they say that people “think at the margin”?
Think at the margin: thinking about what the next step or an additional action means for a
person.
People make better decisions when they consider if the additional benefit they gain from one
more unit is greater than the additional cost of that extra unit of a good or service.
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
Principle 8: The standard of living for a nation is determined by its ability to produce goods
and services—There is a fundamental relationship between productivity and living standards.
The more productive a society, the better its people live. Public policy can encourage this
productivity by promoting education and access to the necessary tools for its workforce.
4. Using the 10 Principles of Economics, explain why trade is beneficial?
Principle 5: Trade can leave everyone in a better position—Trade allows people to concentrate
on what they do best and exchange their ability with others to supplement their own needs.
This provides everyone involved with access to a larger number and variety of goods and
services.
5. How does printing money impact prices?
Printing too much money causes prices to rise. The more a government prints money, the less
the money is worth, thus making goods and services more expensive. Consistently rising
, prices for goods and services results in inflation. Also, there is a relationship between inflation
and unemployment. To lower inflation, the government may reduce the amount of money in
the economy. This, in turn, reduces the amount of money people spend. Less spending means
fewer goods and services being bought, ultimately leading to less production and more
unemployment.
6. What are the differences between the Traditional and the Market economy?
7. Identify two disadvantages of a Command economy?
8. Explain one of the advantages of the Mixed economy?
9. How are macroeconomics and microeconomics different?
10. Give an example of a normative statement.
11. Identify the payment that goes to each of the four factors of production.
12. What does the circular flow diagram depict?
Module 2 – The Economic Problem
1. Why is the concept of scarcity so important in economics?
2. What does an individual’s budget constraint identify?
3. Identify two ways in which the budget constraint and the PPF are similar and two ways in which
they are different.
4. Using the graph below, explain the trade-off associated with a movement from Point A to Point
B.
5. Using the graph above, explain why there is no trade-off associated with the movement from
Point C to Point B.
Solutions | A+ Graded | 2026 Updates | 100% correct
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer? Give an example of a
“What” question.
What to produce?
EX: A property owner has 500 acres of flat land and has been approached by two different
businesses. One business wants to drill for oil, and the other wants to raise cattle.
How it will be produced?
EX: A well-established company has been producing goods and wants to create a new line of
production. The company needs to decide whether it should use a current factory or find a
new location.
For whom the goods or services are produced?
EX: To address environmental concerns, Congress is considering a bill that would increase the
price of electricity generated by coal. Increasing the price of electricity creates a problem for
low-income households.
2. What do economists mean when they say that people “think at the margin”?
Think at the margin: thinking about what the next step or an additional action means for a
person.
People make better decisions when they consider if the additional benefit they gain from one
more unit is greater than the additional cost of that extra unit of a good or service.
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
Principle 8: The standard of living for a nation is determined by its ability to produce goods
and services—There is a fundamental relationship between productivity and living standards.
The more productive a society, the better its people live. Public policy can encourage this
productivity by promoting education and access to the necessary tools for its workforce.
4. Using the 10 Principles of Economics, explain why trade is beneficial?
Principle 5: Trade can leave everyone in a better position—Trade allows people to concentrate
on what they do best and exchange their ability with others to supplement their own needs.
This provides everyone involved with access to a larger number and variety of goods and
services.
5. How does printing money impact prices?
Printing too much money causes prices to rise. The more a government prints money, the less
the money is worth, thus making goods and services more expensive. Consistently rising
, prices for goods and services results in inflation. Also, there is a relationship between inflation
and unemployment. To lower inflation, the government may reduce the amount of money in
the economy. This, in turn, reduces the amount of money people spend. Less spending means
fewer goods and services being bought, ultimately leading to less production and more
unemployment.
6. What are the differences between the Traditional and the Market economy?
7. Identify two disadvantages of a Command economy?
8. Explain one of the advantages of the Mixed economy?
9. How are macroeconomics and microeconomics different?
10. Give an example of a normative statement.
11. Identify the payment that goes to each of the four factors of production.
12. What does the circular flow diagram depict?
Module 2 – The Economic Problem
1. Why is the concept of scarcity so important in economics?
2. What does an individual’s budget constraint identify?
3. Identify two ways in which the budget constraint and the PPF are similar and two ways in which
they are different.
4. Using the graph below, explain the trade-off associated with a movement from Point A to Point
B.
5. Using the graph above, explain why there is no trade-off associated with the movement from
Point C to Point B.
