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Government

Unit 3 - Economics

Question	Answer
Factors of Production	Land, labor, capital, and entrepreneur; the four groups of resources that are used to make all goods and services.
Land	Any natural resource provided by nature and used in the production process
Labor	Human effort directed toward producing goods and services (the workforce)
Capital	The manmade factories, tools, and equipment that are necessary for production. Also includes money.
Entrepreneur	A person who starts up and takes on the risk of a business
Traditional Economy	An economy in which production is based on customs and traditions; roles are typically passed down from one generation to the next.
Market Economy	An economy in which the decisions of households and firms (businesses) interacting in markets decide what is produced (through supply and demand). There is no government involvement in this.
Mixed Economy	An economy in which most economic decisions result from the interaction of buyers and sellers in markets; however, the government also creates regulations
Command Economy	An economic system in which the government controls a country's economy.
Opportunity Cost	The best alternative that we forgo, or give up, when we make a choice or decision.
Scarcity	Not enough resources to satisfy unlimited wants
Capitalism	An economic system based on private ownership of capital (a type of Free Market economy)
Communism	A political and economic system where factors of production are collectively owned and directed by the state (a type of Command Economy).
Economic	What to produce? How to produce? How much to produce? For whom to produce? All of these are examples of ____ questions
Recession	A period of declining real GDP, accompanied by lower real income and higher unemployment.
Expansion	A period of economic growth as measured by a rise in real GDP
Gross Domestic Product	The dollar amount of all final goods and services produced within a country's borders in a year.
Consumer Price Index	A measure of the average change over time in the price of a fixed group of products.
Monetary Policy	Power given to the Federal Reserve that attempts to manage the economy by controlling the money supply and thus interest rates.
Discount Rate	This is the Interest rate the Federal Reserve charges on its loans to member banks
Federal Reserve	A governmental organization formed to regulate the money supply and help keep the economy stable; they conduct monetary policy.
Monopoly	In economics, a market in which there are many buyers but only one seller; the government works to regulate (prevent) these.
Unemployment	Measures the number of people who are able to work, but do not have a job during a period of time.
Inflation	A continuous rise in the price of goods and services is known as...
Fiscal Policy	Government policy that attempts to manage the economy by controlling taxing (raising/lowering) and spending (increasing/decreasing).
Mixed	The United States has a ___________ economy.
Command	North Korea has a _____________ economy.
President and Congress	Fiscal Policy is created by:
Laissez-Faire	Idea that government should play as small a role as possible in economic affairs. They should have a 'hands off' approach.
Depression	A prolonged recession is known as a:
Interest rates	Amount you pay to borrow money (for car or house, for example); Rates are regulated by the Federal Reserve
Reserve Requirement	A regulation in which requires a bank to keep a certain percentage of each dollar deposited in the bank in its vault. This is set by the Federal Reserve.
Open Market Operations	When the Federal Reserve is buying and selling government securities/bonds to change the supply of money

Created by: mrbayne

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