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economy exam 1
economy exam words
| Question | Answer |
|---|---|
| allocation | Using a resource to fulfill a need or want |
| Human resources | Broad category of human efforts |
| Opportunity cost | Value of the best alternative you must pass up |
| goods | Something you can see, feel and touch |
| Incentives | Reason people chose (money) |
| Services | human ingenuity |
| Capital Resourcesements | Human creations used for goods ... like money ... not used up. |
| Wants and Needs | Unlimited |
| Natural Recourses | Land, Forest, Minerals, Oil Reserves, Water, and Animals (can be used up)_ |
| Economic Theory | Models that are simplicated studies to make decisions |
| Sunk cost | A cost that has been incurred and cannot be reversed |
| Postitive vs. Normative Stat | Positive statement is positive and Normative statement reflects someones opinion |
| Three Basic Questions | What products - How - Who |
| Free Market | Business governed by supply and demand not restrained by gov't regulation or subsidy demand |
| Scarcity | Condition facing all societies because there are not enough productive resources to satisfy peoples unlimited wants |
| Mixed Economy | economic system em that mixes central planning with competitive markets |
| Right Transitional | an economy which is changing from a centrally planned economy to a free market |
| Command | An economywhere supply and price are regulated by the government rather than market forces. |
| Left Transitional | an economy that is moving from free market to more governed control. |
| Traditional Economy | A traditional economy is a very underdeveloped economy that often depends on agriculture as its main base. |
| Demand | What you need / want |
| Supply | what is available |
| Law of Demand | economic law that states that consumers buy more of a good when its price decreases and less when price increases |
| Law of Supply | The more the good is wanted the higher the price ... the less they want it the less expensive |
| Determinants of Supply | any influence on the supply of a good: 1. price of good, 2. technology, 3. prices of related goods, 4.supplies available |
| Determinants of Demand | Price Preference (taste, look) prices of other goods |
| Quantity Demanded | A term used in economics to describe the total amount of goods or services that are demanded at any given point in time. |
| Quantity Supplied | A term used in economics to describe the amount of goods or services that are supplied at a given market price. |
| Inferior Goods | good that decreases in demand when consumer income rises |
| Normal Goods | good that consumer demand increases when their income increases |
| Substitutes | one way we classify goods (two or more) is by examining the relationship of the demand schedules when the price of one good changes. |
| Compliments | goods that work well in conjuction with one another. |
| Supply Elasticity | a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price. |
| Demand Elasticity | how sensitive the demand for a good is to changes in other economic variables. |
| Market Equilibrium | A situation in which the supply of an item is exactly equal to its demand. Since there is neither surplus nor shortage in the market, price tends to remain stable in this situation. |
| Surplus | when there is more supply than demand, as in extra resources. |
| Shortage | a deficiency or lack in the amount needed, expected, or due; deficit |
| Law of diminishing marginal Utility | As a person increases consumption the less utility than the one before |
| Price Floor | The price that products or services are not allowed to go below. |
| Price Ceiling | The price that a product or service is not allowed to go above |
| Gross Domestic Product (GDP) | the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living. |
| Consumer Price Index (CPI) | A measure that examines the weighted average of prices of a basket of consumer goods and services. |
| Tools of MP, Reserve Requirements, Interest Rates, (UR) | If the cost of credit is reduced, more people and businesses will borrow money and the economy will move in a positive direction .... interest rates effect the amount it costs to borrow money or get credit |
| Recession, expansion, business cycle | Five stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery. |
| Real vs Nominal GDP Growth | A gross domestic product (GDP) figure that has not been adjusted for inflation |
| Cyclical Unemployment | A factor of overall unemployment that relates to the cyclical trends in growth and production that occur within the business cycle. |
| Frictional Unemployment | Unemployment that is always present in the economy, resulting from temporary transitions made by workers and employers or from workers and employers having inconsistent or incomplete information. |
| Structural Unemployment | Unemployment resulting from changes in the basic composition of the economy. |
| Inflation | rise in the general level of prices of goods and services in an economy over a period of time |
| Macroeconomic Goals | The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. |
| Aggregate Demand | The total amount of goods and services demanded in the economy at a given overall price level and in a given time period. |
| Aggregate Supply | The total supply of goods and services produced within an economy at a given overall price level in a given time period. |
| Public Spending | Expenditure by government, covering the military, health, education, infrastructure, development projects, and the cost of servicing (paying off the interest on) overseas borrowing. |
| Investment Spending | Expenditures on capital goods including new housing. |
| Business Tax | (1) corporate franchise tax, (2) employment (withholding) tax, (3) excise tax, (4) gross-receipts tax, and (5) value added tax (VAT). |
| Income Tax | what the government charges on financial income generated by all entities within their jurisdication |
| Progressive and Regressive Tax | where the average tax rate increases as the amount subject to taxation increases. In between is a flat |
| Debt | Something that is deficient or required to restore a normal state. |
| Deficit | The amount by which a sum of money falls short of the required or expected amount; a shortage: large budget deficits |
| Tight Monetary Policy | Less Money in circulation |
| Loose Monetary Policy | More Money in circulation |
| Open Market Operations | the buying and selling of government bonds on the open market by a central bank |
| Nationalization | the process of taking an industry or assets into government ownership by a national government or state. |
| Regulation | a principle, rule or law designed to control or govern conduct (spending) |
| Discretionary and Non-Discretionary Spending | Discretionary: governments can spend through an appropriations act. Non-discretionary spending: required by law (a law would have to be changed) |
| Tariff | list of export or import duties |
| Subsidy | Direct financial aid |
| Embargo | government order restricting movement of ships or goods |
| Imports | To bring in from another country |
| Exports | To send to other countries |
Created by:
jolinsea
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