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Macro Econ Exam 1
| Question | Answer |
|---|---|
| Adam Smith | Scottish economist Smith said the “invisible hand” determines what get produced, how, and for whom. |
| Karl Marx | German economist that emphasizes how free markets tend to concentrate wealth and power in the hands of few at the expense of many. |
| John Maynard Marx | British economist viewed that government should play an active but not all-inclusive role in managing the economy. |
| Three Basic Decisions | WHAT to Produce HOW to Produce FOR WHOM to Produce |
| Economics | The study of how best to allocate scarce resources among competing uses. |
| Scarcity | Lack of enough resources to satisfy all desired uses of those resources. |
| Factors of Production | Land Labor Capital Entrepreneurship |
| Opportunity Cost | The most desired goods and services that are forgone to obtain something else. |
| Production Possibilities | The alternative combinations of final good and services that could be produced in a given time period with all available resources and technology. |
| Gross Domestic Production (GDP) | The total market value of all final goods and services produced within a nation’s boarders in a given period of time. |
| Per Capita GDP | The dollar value of GDP divided by total population; average GDP |
| Income Transfers | payments to individuals for which no current goods or services are exchanged, such as Social Security, welfare, and unemployment benefits |
| GDP = C + I + G + (X-M) | GDP = Consumer + Investment + Government + Net Export(X-M) |
| Net Export | The value of export minus the value of imports (X-M) |
| Productivity | Output per unit of input – The high productivity of the U.S economy results from using highly educated workers in capital-intensive production processes |
| Sole Proprietorship | A business owned by one person and operated for its profits |
| The Education Gap between Rich and Poor Nations | Workers in poorer, less developed countries get much less education and training. U.S is at 94% |
| Ceteris Paribus | The assumption of nothing else changing |
| Market Demand | The total quantities of a good or services people are willing and able to buy at alternative prices in a given time period; the sum of individual demands |
| Market Supply | The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus |
| Demand Curve | A curve describing the quantities of a good consumer is willing and able to buy at alternative prices in a given time period |
| Supply Curve | are upward-sloping to the right. |
| Equilibrium Price | The price at which the quantity of a good demanded in a given time period equals the quantity supplied. |
| Optimal Mix of Output | The most desired combination of output attainable with existing resources, technology and social values. |
| Market Failure | An imperfection in the market mechanism that prevents optimal outcome |
| Externalities | Costs (or benefits) of a market activity borne by a third party |
| Public Goods | A good or service whose consumption by one person does not exclude consumption by others |
| Market Power | The ability to alter the market price of a good or service |
| Transfer Payment | Payments to individuals for which no current goods or services are exchanged, like social security, welfare, and unemployment benefits |
| Unemployment | The inability of labor force participates to find jobs. |
| Inflation | An increase in the average level of prices of goods and services |
| Income Taxes | greatest source of income for the government |
| Progressive Tax | A tax system in which tax rates rese as incomes rise |
| Social Security Taxes | people working now transfer part of their earning s to retired workers by making “contributions” to S.S. |
| Proportional Tax | A tax that levies the same rate on every dollar of income |
| Regressive Tax | A tax system in which tax rates fall as incomes rise |
| Corporate Tax | The federal government taxes the profits of corporations as well as the incomes of consumers. |
| Excise Tax | Are sales taxes imposed on specific goods like alcohol, cigarettes, fire arm, and gasoline. Such taxes not only discourages production or consumption their by reducing the quantity demand. |
| Public Choice | Theory of public sector behavior emphasizing rational self-interest of decision makers and voters. |
| Government Waste | The average taxpayer now believes that state governments waste 42 cents out of each dollar, while the federal Gov. Wastes 53 cents out of each tat dollar. |
| Efficiency | Are we getting as much services as we could from the resources we allocate to government |
Created by:
cassandra_mary
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