Ch. 3 Economics – Flashcards
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an economic system in which privately owned businesses have the freedom to operate for a profit with limited government intervention
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free enterprise
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act of buyers and sellers freely and willingly engaging in market transactions; a characteristic of capitalism and free enterprise
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voluntary exchange
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fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish; includes both tangible and intangible property
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private property rights
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something that motivates
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incentive
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difference between the revenue from sales and the full opportunity cost of resources involved in producing the sales
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profit
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driving force that encourages people and organizations to improve their material well-being; characteristic of capitalism and free enterprise
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profit motive
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the struggle among sellers to attract consumers
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competition
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fuel made from wood, peat, municipal solid waste, straw, corn, tires, landfill gases, fish oils, and other waste
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biofuels
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severe economic downturn that lasted from late 2007 through mid-2009
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Great Recession
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risk-taking individuals who introduce new products or services in search of profits; one of the four factors of production
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entrepreneurs
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something that stimulates activity among people or forces
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catalyst
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role of consumer as ruler of the market in determining the types of goods and services produced
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consumer sovereignty
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someone or something that controls activities
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regulator
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economic system that has some combination of traditional, command, and market economies; also see modified free enterprise economy
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mixed economy
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free enterprise market economy where people carry on their economic affairs freely, but are subject to some government intervention and regulation; also see mixed economy
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modified free enterprise economy
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lowest legal wage that can be paid to most workers
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minimum wage
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unfavorable or harmful
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adverse
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federal program of disability and retirement benefits that covers most working people
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social security
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federal health insurance program for senior citizens, regardless of income
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medicare
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sustained rise in the general level of prices of goods and services
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inflation
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income that does not increase over time
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fixed income
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to allow for
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accommodate
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Which of the following is NOT characteristic of free enterprise capitalism? -economic freedom -rationing -voluntary exchange -profit motive
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rationing
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Which of the following is NOT part of free enterprise capitalism? -private property -competition -equal wages -voluntary exchange
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equal wages
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True or False: the seller always benefits the most in a voluntary exchange
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False
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True or False: private property may be used as collateral for a loan
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true
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True or False: people tend to treat public property better than private property
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false
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True or False: large businesses provide 55% of all jobs in the United States
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false
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The benefits of competition are _____
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-lower prices on goods and service -bettrer quality goods and services -greater variety of goods and services
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True or False: competition will force inefiicient businesses to shut down or try to produce different products
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true
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True or False: nations with a strong free enterprise system usually have strong and democratic traditions
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true
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True or False: when more and better products are produces in free market economies wealth is created
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true
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True or False: uneven economic growth can have the effect of removing unneeded busnisses and public service
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true
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one purpose of the Tennessee Valley Authority was __
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to bring electricity to rural residents of the Tennessee Valley
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Which of the following can a corporation NOT do? -own property -vote -enter into contracts -sue and be sued
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vote
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True or False: corporations can refuse to hire someone if they are not a citizen of the US
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false
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True or False: most entrepreneurs succeed in their business endeavors
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false
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Which of the following is NOT a result of successful entrepreneurs? -profits -satisfaction with a job well done -workers have more and better paying jobs -consumers have new and better products -government receives more tax revenue -reduced demand for labor
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reduced demand for labor
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Which of the following products are no longer produced because they were rejected by consumers?
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-harley davidson perfume -flower-flavored PEZ -dr. care's aerosol toothpaste
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The US has an average per capita income of $51,700. Average per capita income in a nation means that every citizen that country earned that amount of money.
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no
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Unemplyment compensation, Workman's compensation, Social Security, and Medicare all support the economic goal of ______
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economic security
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The Employment Act of 1946 was passed to support the economic goal of ____
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full employment
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When an economy is capitalist and has free markets, it can be said that the economy is based on ____
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free enterprise
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One of the characteristics of the US economy is the ______ role of the government
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limited
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Between 2007 and 2009, the US went through a difficult economic period called the _____
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Great Recession
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True or False: the profit motive is what drives people and organizations to improve their material
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true
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_______ rights allow people to own and control their possessions as they see fit, as long as it does not unterfere with the rights or others.
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Private Property
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The three sunonymous terms used to describe the US economic system are free enterprise, capitalism, and ______
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free market
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The dollar value of all final goods, services, and structures produced in a country in a year is known as _______
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Gross Domestic Product
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The struggle among sellers to attract consumers by offering the best product at the lowest price is known as _____
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competition
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What motivates people to work, save, and invest?
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incentives
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What gives people and businesses the opportunity to make their own decisions?
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economic freedom
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The phrase "the customer is always right" is most often associated with what term?
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consumer sovereignty
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How does the government operate in a free enterprise economy?
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it establishes laws and rule to maintain competition
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In its role as protector of the American free enterprise system, one of the issues the government must deal with is _____
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environmental hazards
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Who ultimately determines the success of a product?
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the consumer
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Consumers can infuence the production and sale of goods by _______
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"voting" with their dollars
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True or False: the minimum wage was established at national and state levels as the lowest legal wage that can be paid to the majority of workers
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true
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True or False: US economic and social goals have stayed the same over time
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false
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True or False: Social Security is one example of how Americans have modified their free enterprise economy
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true
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True or False: in general, people do not want their economic system to create as many jobs as possible
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false
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True or False: economic growth is necessary as a nation's population increases
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true
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What is the name of the federal health insurance program for senior citizens?
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medicare
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Inflation causes people to _____
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work mroe to pay for basic necessitites
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Which of the following is currently considered one of the seven major economic and social goals in the US?
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price stability
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What is one of the benefits related to economic equity?
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receiving equal pay for equal work
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Protection from layoffs, illnesses, injuries or disabillities falls under the goal of ______
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economic security
