Econ Unit 1 Test- What is Economics? – Flashcards
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The key word in economics
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Choices
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anyone who purchases goods and services for their own personal use
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consumer
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"demand-side" economics
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keynesian economics
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the study of economics on a larger scale
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macroeconomics
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The study of moving to the "next-unit"
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marginal analysis
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attempts to influence the economy through control of the circulation of money
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monetary policy
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the loss of the next best alternative in a decision
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opportunity cost
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the potential for loss
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risk
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unlimited wants for limited goods
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scarcity
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intangible items of value
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services
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goods used to produce other goods/services
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capital
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Sam wants to play basketball and work after school but cannot do both. Sam chooses to play basketball. What is Sam's opportunity cost?
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Work
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Has the most control over US monetary policy
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The Federal Reserve
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According to the Laffer Curve, if the income tax rate was 100%, the government would...
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make no revenue from the tax
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Who was the biggest winner in the Iowa caucus
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Marco Rubio
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two straight quarters of negative GDP is referred to as..
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Recession
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the 4 factors of production
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land labor management capital
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unlimited wants for limited resources
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scarcity
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the loss of the next best alternative when making a decision
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opportunity cost
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any tangible item of value available to consumers for purchase
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goods
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any intangible item of value available to consumers for purchase
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services
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anyone willing to take a risk to start a business venture
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entrepreneur
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the "u" in CPIu stands for
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urban
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CPI stands for
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consumer price index
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the economic indicator that measures the total value of all goods and services produced within a country in a year
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GDP (Gross Domestic Product)
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the type of unemployment that results from a gap in the skills and qualifications employers are seeking and the skills and qualifications employees currently have
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structural unemployment
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an economic model that shows that maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time
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production possibility curve
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an economic system where the people answer all of the fundamental economic questions and are free to make all of the economic decisions
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market economy
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an economy, much like that of the US today, that combines elements of a market economy with government regulations
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mixed economy
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what the acronym COLA stands for
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Cost of Living adjustment
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the 3 questions asked when deciding who controls the economy
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What to produce? How to produce? For whom to produce?
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when people make an economic decision; it serves their best interest
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rational choice concept
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policy that tries to help out businesses first
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supply-side
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policy that tries to help out the consumer first
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demand-side
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the use of the budget to help the economy
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fiscal
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the government use of the flow of money to help the economy (Fed)
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monetary
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the 3 monetary policies the Fed controls
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-interest rates -reserve ratios -buying/ selling of bonds
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the % of a deposit that is actually in the bank
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reserve ratios
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model that compares the total tax revenue to the tax rate (certain % of tax that is the best)
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Laffer Curve
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the total value of all goods and services produced within a country within a year
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GDP
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GDP/ Population
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Standard of Living
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numbers that are by number only
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Nominal
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prices that are adjusted for inflation
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real
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type of unemployment where someone is looking for a job for the first time (they want to look)
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frictional
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type of unemployment where there is a specific skill/ look that someone else has
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structural
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type of unemployment where business increases/ decreases throughout the year
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seasonal
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the number of people accepting jobs for below their skills/ qualifications (hard to mess up)
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underemployment
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type of unemployment that follows the economic cycle
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cyclical
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face value of a loan
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principle
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fee payed to borrow money (% of principle)
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interest
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day in which both principle and interest must be ruined
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maturity
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consumers who think the government need to drop in more means they support
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regulation
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voters that think that we can allow businesses to regulate themselves
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deregulation
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model that shows that unemployment and inflation have a negative correlation-as unemployment drops, inflation rises
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phillip's curve
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when did the US break the Phillips curve bc we had high inflation and high unemployment
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70's
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demand goes up faster than businesses; businesses can't produce fast enough
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Demand Pull Inflaiton
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a model that shows how income distribution differs from its perfect distribution
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Lorenz Curve
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a model that represents where the supply and demand meet
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Market Equilibrium
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law that states if price goes up; demand goes down
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Law of Demand
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law that states as supply goes up; price also goes up
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Law of Supply
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a model with the means of trying to measure how much you could produce if using all of your resources- pitting 2 possibilities would've been different anyway
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Production Possibility Curve
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the 5 Characteristics of a pure market economy
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limited government economic freedom private property profit motive competition
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where both sides of a trade expect to benefit
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voluntary exchange
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the right to start your own business
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free enterprise
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you get to choose the occupation you want to pursue, and where you want to work
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Employee freedom
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employer has the right to hire whoever they want
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employer freedom
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to be able to purchase the item of your choice at the price of your choice
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consumer freedom
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to be able to produce an item at the price of you choice
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producer freedom
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the right to own your own property and use it however you want
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private property
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the right to keep everything you earn (economic incentive)
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profit motive
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what drives a market economy
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profit incentive
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profit incentive leads to....
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competition
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trying to create the best product at the lowest price
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competition
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leads to variety
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competition
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the opposite of variety
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monopoly
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in a pure market economy, government only exists to eliminate monopolies and create competition
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Laissez-Faire (limited government)
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the founder of classical economics that argued the general welfare of society is best promoted by allowing individuals to pursue their own self-intrest within the law
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Adam Smith
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school of economic thought that believes the markets are unstable and that the federal government sometimes needs to intervene in the economy to help the nation's citizens
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democrats
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school of economic thought that believes free markets will take care of themselves and that government intervention in the working of the market should be minimal
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republicans
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Judgment depends on ______ beliefs/ characteristics that a group considers important
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values
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economic system in which private individuals own the factors of production
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capitalism
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__________ as practiced in the US today would best be defined as an economic system in which private individuals own the factors of production but use them within certain limits
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capitalism
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economic system in which individuals own the factors of production and decide how to use them within legal limits (same as capitalism)
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free-enterprise system
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a system in which the government owns the major factors of production and attempts to manage output and the distribution of goods
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socialism
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the workers in a marxist society
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proletariat
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believed that the value of goods depends on how much labor is used in producing them
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Karl Marx
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term used by Marx for his idealized society in which no government is necessary
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communism
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system that works within the constitutional framework of a nation to elect socialists to office; the government usually controls only some areas of the economy
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democratic socialism
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system that supports revolution as a means to overthrow capitalism and bring about socialist goals; the entire economy is controlled by a central government
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authoritarian socialism (communism)
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having a surplus of one item and trading for what you don't have
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comparative advantage
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current GDP
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16.77 trillion USD
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current Consumer Price Index
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+1.49%
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current unemployment rate
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5.5%
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current misery index
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6.27
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is an economic indicator, created by economist Arthur Okun, and found by adding the unemployment rate to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country.
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misery inde
