WGU D089 Study Guide Principles of Economics | Actual
study complete solutions | A+ Graded | 2026 Updates |
100% correct
Principles of Economics:
1. Everyone faces tradeoffs.
2. The cost of something is determined by what someone gives up to get it.
3. Rational people think at the margin.
4. People respond to incentives.
5. Trade can benefit everyone.
6. Markets are a sound method of organizing economic activity.
7. Governments may be able to improve market outcomes.
8. The standard of living for a nation is determined by its ability to produce goods and
services.
9. Printing too much money causes prices to rise.
10. Society faces a short-run trade-off between inflation and unemployment (Mankiw,
2015).
Economic systems refer to how an economy distributes scarce resources. The four existent
types of economies are the following:
• Traditional economy—A system where individuals make decisions based on
traditions, beliefs, and customs.
, • Command economy (centralized)—A system where the government makes all the
decisions.
• Market economy (decentralized)—A system where businesses make decisions
based on consumer demand.
• Mixed economy—A system where businesses make decisions based on consumer
demand, but the government makes decisions in terms of regulations, consumer
safety, and environment.
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer? Give an example
ofa “What” question.
What to produce, how it will be produced, and from whom the goods or services are produced.
2. What do economists mean when they say that people “think at the margin”?
Thinking about the next step or an additional action means for a person.
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
Principle 8: Nations' ability to produce goods and services.
4. Using the 10 Principles of Economics, explain why trade is beneficial.
Principle 5: Trade leaves everyone in a better position. Allows people to concentrate on what
they do best and exchange their abilities with others.
5. How does printing money impact prices?
Printing too much money can cause prices to rise which causes inflation.
6. What are the differences between the Traditional and the Market economy?
Traditional economy relies on habit, custom, or ritual to decide what to produce, how to
produce it, and to whom to distribute it. A market economy, economic decisions are made by
individuals and are based on exchange, or trade. A command economies, because a central
authority is in command of the economy. Mixed economies market-based economic systems in
which government plays a limited role.
7. Identify two disadvantages of a Command economy.
A. Leaders provide for themselves at the expense of the general population. IN the former
Soviet Union, people were forced to go without basic consumer goods and adequate housing
while high ranking government officials had nice cars, houses, and food.
study complete solutions | A+ Graded | 2026 Updates |
100% correct
Principles of Economics:
1. Everyone faces tradeoffs.
2. The cost of something is determined by what someone gives up to get it.
3. Rational people think at the margin.
4. People respond to incentives.
5. Trade can benefit everyone.
6. Markets are a sound method of organizing economic activity.
7. Governments may be able to improve market outcomes.
8. The standard of living for a nation is determined by its ability to produce goods and
services.
9. Printing too much money causes prices to rise.
10. Society faces a short-run trade-off between inflation and unemployment (Mankiw,
2015).
Economic systems refer to how an economy distributes scarce resources. The four existent
types of economies are the following:
• Traditional economy—A system where individuals make decisions based on
traditions, beliefs, and customs.
, • Command economy (centralized)—A system where the government makes all the
decisions.
• Market economy (decentralized)—A system where businesses make decisions
based on consumer demand.
• Mixed economy—A system where businesses make decisions based on consumer
demand, but the government makes decisions in terms of regulations, consumer
safety, and environment.
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer? Give an example
ofa “What” question.
What to produce, how it will be produced, and from whom the goods or services are produced.
2. What do economists mean when they say that people “think at the margin”?
Thinking about the next step or an additional action means for a person.
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
Principle 8: Nations' ability to produce goods and services.
4. Using the 10 Principles of Economics, explain why trade is beneficial.
Principle 5: Trade leaves everyone in a better position. Allows people to concentrate on what
they do best and exchange their abilities with others.
5. How does printing money impact prices?
Printing too much money can cause prices to rise which causes inflation.
6. What are the differences between the Traditional and the Market economy?
Traditional economy relies on habit, custom, or ritual to decide what to produce, how to
produce it, and to whom to distribute it. A market economy, economic decisions are made by
individuals and are based on exchange, or trade. A command economies, because a central
authority is in command of the economy. Mixed economies market-based economic systems in
which government plays a limited role.
7. Identify two disadvantages of a Command economy.
A. Leaders provide for themselves at the expense of the general population. IN the former
Soviet Union, people were forced to go without basic consumer goods and adequate housing
while high ranking government officials had nice cars, houses, and food.
