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Econ Final Beck
| Question | Answer |
|---|---|
| The study of how people seek to satisfy their needs and wants by making choices | Definition of Economics |
| Something essential for survival, example: food, clothing, shelter | Needs |
| Something people desire, but is not necessary for survival | Wants |
| The most desirable alternative given up as the result of a decision | Opportunity cost |
| Alternatives that we give up when we choose one course of action over another | Trade off |
| What goods and services should be produced, How should these goods and services be produced,Who should consume consume the goods and services | Three basic economic questions |
| A person who decides how to combine resources to create goods and services | Entrepreneur |
| Principle that limited amounts of goods and services are available to meet unlimited wants | Scarcity |
| Resources that are used to make goods and services | Factors of production |
| All natural resources used to make goods and services | Land |
| Any human made resource that is used to produce other goods and services | Capital |
| Effort people devote to tasks for which they are paid | Labor |
| Utility | |
| Physical objects that someone produces | Goods |
| Action or activities that one person performs for another | Services |
| Goods that last for a relatively long time, like refrigerator, car | Durable goods |
| Goods that last short periods of time, like light bulbs, food, shoes | Non durable goods |
| Economic system characterized by private or corporate ownership of capital goods | Free enterprise |
| Firms supply households with goods and services-household pay for them,Households supply firms with land, labor, and capital-firms pay for them | Circular flow |
| Economic system that relys on habit, custom, or ritual to decide the three key economic questions | Traditional economy |
| Economic system that allows buyers and sellers to exchange things | Market economy |
| Market-based economic system in which the government is involved to some extent | Mixed economy |
| Trade, industry, and the means of production are controlled by private owners with the goal of making profits | Capitalism |
| Political system in which the government owns and controls all resources and means of production and makes all economic decisions | Communism |
| Range of economic and political systems base on the belief that wealth should be evenly distributed throughout society | Socialism |
| Power of consumers to decide what gets produced | Consumer sovereignty |
| General increase in prices across an economy | Inflation |
| Recession that is especially long and severe | Depression |
| Prolonged economic contraction | Recession |
| Period of economic growth as measured bya rise in real GDP | Expansion |
| Institution that functions much like a business, but does not operate for the purpose of general profit | Non profit organizations |
| Legal entity, owned by individual stockholders, each of whom has limited liability for the firms debts | Corporations |
| Legal document that provides for the creation of a corporate entity | Charter |
| Business owner and managed by a single individual | Sole proprietorship |
| The owner of a business, or a holder of property | Proprietor |
| Person who owns stock in a corporation | Stockholder |
| Type of partnership in which only one partner is required to be a general partner | Limited partnership |
| Business combination merging more than three businesses that produce unrelated products or services | Conglomerate |
| Stock market launch is a type of public offering where shares of stock in a company are sold to the general public | IPO(initial public offering) |
| Amount of goods available | Supply |
| Desire to own something and the ability to pay for it | Demand |
| Supply of a good or service that increases or decreases as the price of an item goes down or up | Elastic supply |
| Supply and demand for a good or service are unaffected when the price of that good or service changes | Inelastic supply |
| Demand for a product or service is sensitive to price changes | Elastic demand |
| Demand for a product or service is not sensitive to price change | Inelastic demand |
| Consumers will buy more of a good when its price is lower and less when its price is higher | Law of Demand |
| Producers offer more of a good as its price increases and less as it price falls | Law of Supply |
| Quantity of output produced by one person | Productivity of labor |
| Federal Trade Commission-federal agency, established in 1914, that administers antitrust and consumer protection legislation in pursuit of free and fair competition in the marketplace | FTC |
| Market structure in which a few large firms dominate a market | Oligopoly |
| Market in which a single seller dominates | Monopoly |
| The percentage of income paid in taxes decreases as income increases | Regressive tax |
| Percentage of income paid in taxes remains the same at all income levels | Proportional tax |
| Percentage of income paid in taxes increases as income increases | Progressive tax |
| Federal Income Contributions Tax- United States federal payroll tax imposed on both employees and employers to fund Social Security and Medicare | FICA |
| Doctine-government should not interfere in the marketplace | Laissez faire |
| First, pay down the national debt, second, pay for national security, third, pay for entitlement programs like Medicare, Medicaid and Social Security | Trends in government spending |
| Raises moral questions concerning welfare, justice and freedom | Basic economic Philosophy |
| Sharply cutting taxes will increase the incentive people have to work, save, and invest. Greater investments will lead to more jobs, a more productive economy, and more tax revenues for the government. | Supply side Economics (Trickle Down) |
| Us government spending programs to increase employment | Keynesian economics (Pump Priming) |
| Bill that authorizes a specific amount of spending by the government | Appropriations bill |
| Tax on production or sale of goods | Excise tax |
| Largest office within the Executive Office of the President of the United States. The Director of the OMB is a member of the executive office of the president. The main function of the OMB is to assist the President in preparing the budget. | OMB(Office of Management and Budget) |
| Budget in which revenue and spending are equal | Balanced budget |
| Financial obligations of a national government resulting from deficit spending - $17,509,691,832,477.53 = 17.5 trillion | Size of federal debt |
| Monetary system of a country | Monetary standard |
| Central banking system of the United States | Federal Reserve System |
| Paper money used in the United States backed by the Federal Bank | Federal Reserve Notes |
| Coined money, usually gold or silver, used to back paper money | Specie |
| Objects that have value because the government decreed that they are an acceptable means to pay debts | Fiat money |
| Objects that have value in and of themselves and are also used as money | Commodity money |
| Monetary system in which paper money and coins had the value of a certain amount of gold | Gold standard |
| Direct exchange of one set of goods or services for another | Barter |
| Anything used to determine value during the exchange of goods and services | Medium of exchange-portability, durability, stability |
| When to high people don't buy and the economy moves into a recession, when low people borrow money and the economy inproves | Effect of interest rates |
| Increase in supply of moneys lowers interest rates, which spurs investment, and through putting more money in the hands of consumers, makes them feel wealthier, and thus stimulating spending, less money has the opposite effect | Effect of change in money supply |
| Organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets | Mutual funds |
| Average value of a particular set of stocks | Dow Jones Industrial Average |
| Market for buying and selling stocks | Stock exchange |
| Country's larges and most powerful stock exchange,handles stock and bond transactions for the top companies in the US and in the world | New York Stock Exchange |
| third-largest stock exchange by trading volume in the United States | American Stock Exchange |
| National Association of Securities Dealers Automated Quotations-trades stocks over the internet or by phone, investors buy directly from brokers who search for best prices | NASDAQ |
| Dollar value of all final goods and services produced within a country's borders in a given year | Gross Domestic Product (GDP) |
| Land, Labor, Capital-LAND=lumber, coal, water-LABOR=waitress, mechanic, oil rig worker-CAPITAL=building that houses a computer, tools used to build commputer | Four economic resource and example of each |
| Study of economic behavior and decisions in a nation's whole economy | Macroeconomics |
| Study of economic behavior and decisions in small units, such as a household and a business | Microeconomics |
| Can be expressed numerically | Economic Benefit |
| Why do people need to make choices? | Because resources are scarce |
| Output increases | What happens when a shift occurs to the right in a production possibilities curve? |
| Output decreases | What happens when a shift occurs to the left in a production possibilities curve? |
| Medium of exchange,unit of account for comparing value of goods and services,store of value | Functions of Money |
| Commodity, representative, specie, fiat | Types of Money |
| Revolves around the family unit, decisions are made according to custom, habit, or tradition | How are the three basic economic questions answered in a traditional economy? |
| The government answers all the basic economic questions | How are the three basic economic questions answered in a command economy? |
| Consumers have the power to answer by what they buy and do not buy | How are the three basic exonomic questions answered in a market economy? |
| Decide which choices are most important to us | What must a consumer do in order to make an economic decision? |
| Benefits you could have received by taking an alternative action,ie opportunity cost of college is money you would have earned if you worked instead. You lose four years of salary while getting your degree; you hope to earn more during your career | Describe the concept of opportunity costs of making decisions |
| As price of a product increases, quantity demanded falls; as the price of a product decreases, quantity demanded increases | Explain what the law of demand states |
| Consumers income, consumer expectations, change in the population size,change in demographics of population, consumer tastes, advertising | What factors can shift demand for a product? |
| Price of product went up and demand for product went down | What does it mean if a demand curve shifts to the left? |
| Price of product went down and demand for product went up | What does it mean if a demand curve shifts to the right? |
| Goods that people buy or do not buy according to the price | Elastic good |
| Goods people buy no matter the price | inelastic good |
| People buy the product no matter the price because they consider the product a necessity-example: milk | Characteristics that helps to identify if a good is inelastic |
| Producers offer more of a good as its price increases and less as its price falls | What does the law of supply state? |
| When supply is not very responsive to changes in price and elasticity is less than one - people are buying the product no matter the price | Characteristics of inelastic supply |
| Supply is very sensitive to changes in price, and elasticity is greater than one, people do not buy the product when price goes up | Characteristics of elastic supply |
| Cost of production and natural resources, taxes,technology,subsidies, regulations, changes in global economy, number of suppliers | Factors that can shift a supply curve |
| Availability and costs of resources,labor, and demand | Determinants of supply |
| It creates a shortage or surplus of goods | How does shift in supply and demand affect market equilibrium |
| It keeps the price of goods and service low so consumers can purchase more for their money | How do consumers benefit from competitive markets? |
| Many buyers and sellers participate, sellers offer identical products,buyers and sellers are well informed about products,sellers are able to enter and exit the market freely | What are the conditions of perfect competition? |
| Start-up costs, technology | What are the barriers to entry in various markets? |
| If barriers of production and prices are low the market is close to perfect, if barriers make it difficult for new businesses to enter the market the market is imperfect and the business will fail | How do barriers determine if a market is perfect or imperfect |
| Recognition of design or color to encourage consumer to buy one product over another | "Label Power" |
| Easy to start up and end a business, few regulations,receive all profits, full control of business | Advantages of a sole proprietorship |
| Unlimited personal liability, limited assess to resources, limited life | Disadvantages of a sole proproetorship |
| Study of a large economy involves tracking the Gross Domestic Product, ensure jobs for everyone, managing the amount of taxation of the population, and keeping the economy stable | Elements of Macroeconomics |
| Freedom to make own economic decisions,jobs for all, fairness,limit inflation-keep prices stable,use resources wisely,promote the American Dream | U.S. economic goals |
| Freedom, efficiency, equality, stability, security, growth | Goals of Free Market System |
| Real values are adjusted for inflation, while nominal values are not | Difference between nominal GDP and real GDP |
| Taxes are used to encourage the economy by paying for road construction, education and national defense. The government also uses taxes to influence the behavior of individuals | What role do taxes play in fiscal policy? |
| Democrats promote higher taxation of population to reduce the national debt, republicans promote reductions in taxation of population and reductions in government spending to lower the national debt | How do democrats and republicans differ in their fiscal policy strategy to decrease the national debt? |
| Raise taxes, decrease government spending | What methods can the government use to balance the federal budget? |
| Advantage over another producer if you can produce the same good or service for less cost. | Comparative advantage |
| To receive the materials, products, services, and foods that they are unable to get in their own country | Why do countries trade? |
| Water | US's most valuable resource |
| When a country imports more than it exports | Trade Deficit |
| Larger market to sell goods and services produced and availability of goods and services available for purchase | Benefits of trade |
| They are able to produce all that they need within their own borders | Why would a country decide not to trade? |
| Must be easily taken with when shopping and easily transferred from one person to the next | Portability of money |
| Objects must withstand the physical wear and tear that comes with being used over and over again | Durability of money |
| Easily divided into small denominations | Divisibility of money |
| All versions of the same denomination of currency must have the purchasing power | Uniformity of money |
| Control the amount available | Limited supply of money |
| Everyone in an economy must be able to take the object that serves as money and exchange it for goods and services | Acceptability of money |
| Durability, portability, divisibility, uniformity, limited supply, acceptability | Six characteristics of money |
| Consumer | |
| Grants in Aid | Aid to State Governments |
| Economic Security |
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