Economics Flashcard Terms
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resources
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Scarcity is defined as a lack of _____ to satisfy wants.
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A scientist invents a long-lasting paint and sells it to a large manufacturer
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The following is an example of entrepreneurship...
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land, labor, capital, entrepreneurship
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The 4 factors of production are
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machines, tools, equipment used to make other products
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Physical capital consist of
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people generally think of themselves when making choices
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The assumption of rational self interest means
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The next best alternative given up when making a choice
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Define Opportunity Cost
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What goods and services to produce? How should goods and services be produced? For whom will goods and services be produced?
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List 3 Economic Q's
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The study of the economy as a whole
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Define Macroeconomics
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Supply to the resource market and demand from the product market
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In the circular flow model households...
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Risk
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When the potential for profit rises, so does the potential for...
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More variety, better products, and lower prices
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Competition produces....
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Competition, Rational self interest, ownership, risk vs profit, low unemployment and slow population growth, and high GDP, high literacy rates
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Characteristics of a free market economy
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The people
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In a pure market economy, who answers the three economic questions?
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Mixed (Socialist)
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Shared resources and decisions between the government and individuals is what type of economy?
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Command (Communist)
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This type of system would most likely experience monopolies
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is the study of economics in regards to individuals
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Microeconomics
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Items of value that can be seen and touched
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Goods
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Items of value that cannot be seen or touched
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Services
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Tax on imports
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Tariff
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Restriction on number of imports
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Quota
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International trade left to its natural course without tariffs, quotas, or other restrictions
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Free Trade
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Uses less resources
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Comparative Advantage
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The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service
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Absolute Advantage
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Company takes advantage of low opportunity cost
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Specialization
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An excess of imports over exports
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Trade deficit
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Exports exceed imports
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Trade Surplus
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Gross Domestic Product measures goods and services produced in the country in one year (no taxes)
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GDP
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Consumer Price Index tracks inflation/measures price of fixed 'basket' of goods over time
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CPI
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The stages that the economy goes through
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Business Cycle
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Turning point of expansion
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Peak
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Economy not doing as well
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Contraction
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Turning point of contraction
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Trough
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Economy is growing
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Expansion
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A stock exchange based in NYC that has the largest equities based exchange
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New York Stock Exchange
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Regulates stock market and protects investors
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Securities and Exchange Comission
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Global electronic marketplace for securities, index for US technology stocks
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NASDAQ
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Money borrowed
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Loan
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Charge for borrowing money/ Amount of ownership a stockholder has in a company
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Interest
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Type of security that shows ownership in a company
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Stocks
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Investor loans money to thing and gets interest back
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Bonds
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Distribution of a portion of a company's earnings to shareholders
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Dividends
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Property or other assets that borrower offers to lender to secure loans
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Collateral
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An installment loan is a loan that is repaid over time with a set number of scheduled payments
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Installment Loan
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Backed by collateral
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Secured Loan
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A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral
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Unsecured Loan
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A small, short-term unsecured loan
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Cash Loan
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Provides info on a potential loan applicant
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Credit Bureau
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Capital, Character, Capacity
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3 C's of Credit
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An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets
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Mutual Fund
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A debt security issued by a corporation and sold to investors, payed back by money to be earned from future operations
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Corporate Bond
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Pays a higher interest rate than a savings account
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Money Market Account
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Percent change in rising prices
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Inflation
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Number of people not working
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Unemployment
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Between jobs, 'temporarily' unemployed
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Frictional Unemployment
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Doesn't have transferable skills
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Structural Unemployment
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Due to recession
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Cyclical Unemployment
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Due to time of year and nature of job
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Seasonal Unemployment
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As price goes up, demand falls and as price falls, demand goes up
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Law of Demand
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A law of economics that states a person gets less satisfaction each time they use a product
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Law of Diminishing Marginal Utility
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Tastes and Preferences, Number of Consumers, Price of Related Goods, Income, and Future Expectations
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Determinants of Demand
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When one person or business is the only one in the industry
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Monopoly
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Government spending and taxes
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What two tools are used to create Fiscal Policy?
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Congress
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Who uses these Fiscal Policy tools?
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Affect money supply, reserve requirements, discount rate
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What three tools are used to create Monetary Policy?
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The Federal Reserve
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Who uses these Monetary Policy tools?
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Inflation, unemployment, output of economy
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What three things are Monetary and Fiscal Policies attempting to control?
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Classical, "Wealth of Nations", "The Invisible Hand", enlightened self-interest, the economy will be stable
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Adam Smith was a ____ Economist who wrote the famous Economics book titled "_____". The major concept that he gave the economics world was "The ____ _____", which means that if everyone acted in his/her own _____ _____-____, then ________________________.
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Expansionary
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The Fed can use ____ monetary policy to speed up economic growth.
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Contractionary
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The Fed can use ____ monetary policy to slow down rapid growth in order to control inflation.
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12 member group, buys and sells securities
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FOMC
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Quantities of goods consumers are willing and able to buy
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Demand
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Quantities of goods sellers are willing and able to sell
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Supply
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As price goes down, sellers are less willing to supply product
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Law of Supply
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Tastes and Preferences Number of Consumers Price of Related Goods Income Future Expectations
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5 Shifters of Demand
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Government payment to a business
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Subsidy
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North American Free Trade Agreement -removes trade barriers between US Canada and Mexico
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NAFTA
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Stems from increase in cost of resources
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Cost Push Inflation
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Min price set by government
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Price Floor
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Pollution
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Negative Externality
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A decline in a nation's output accompanied by high inflation
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Stagflation
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Theory that the economy is self-correcting
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Classical Economics
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Only way to make money is for others to lose the same amount
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Zero Sum Game
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TV signal is not an example
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Public Good
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Income tax
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Progressive Tax
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Dominated by a few large sellers
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Oligopoly
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Many buyers, standardized products, ease of entry
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Perfectly Competitive Market
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The study of the economy as a whole
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Macroeconomics
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A max price set by the government
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Price Ceiling
