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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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1.) Land 2.) Labor 3.) Capital 4.) 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 (capital goods) consist of:

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People generally think of themselves when making a choice

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The assumption of rational self interest means:

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The highest valued alternative one gives up when making a choice

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Opportunity Cost

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1.) What goods and services to produce? 2.) How should goods and services be produced? 3.) For whom will goods and services be produced?

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3 Economic Questions:

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The study of the economy as a whole

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MacroEconomics

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A lack of resources to satisfy wants

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Scarcity

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Buildings, machinery, tools, and other goods that provide productive services over a period of time.

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Capital Goods

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Individuals try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit

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Rational self-interest

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Study of individual consumers and businesses

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Microeconomics

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What should be produced? How should it be produced? For whom should it be produced?

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What are three questions all economics must answer?

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An economic system with no government involvement so private firms account for all production

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Pure market economy

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The ownership, organization, and management of a business

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Entrepreneurship

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Tangible items

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Goods

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Actions or activities that one person performs for another: Intangible.

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Service

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A government tax on imports or exports

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Tariff

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A limit placed on the quantities of a product that can be imported

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Quota

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...

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Free Trade

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The ability of a country to produce a good at a lower cost than another country can.

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Comparative Advantage

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The ability to produce a good using fewer inputs than another producer

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Absolute Advantage

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Goods and services are produced in better quality, quantity and speed when people focus on producing a few things instead of making everything they want by themselves.

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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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When a country exports more than it imports

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Trade Surplus

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Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

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GDP

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(consumer price index) a measure of the overall cost of the goods and services bought by a typical consumer

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CPI

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Recurring fluctuations in economic activity consisting of recession and recovery and growth and decline

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Business Cycle

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Characterized by GDP being at its highest

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Peak

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When the economy starts slowing down

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Contraction

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The lowest point of contraction

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Trough

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Inflation in the economy

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Expansion

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Wall Street, The largest stock exchange, located in New York City. Most of the companies on this exchange are larger companies with higher-priced stock.

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New York Stock Exchange

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reated by Congress to regulate the securities markets and protect investors. In addition to regulation and protection, it also monitors the corporate takeovers in the U.S

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Securities and Exchange Commission

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A global electronic marketplace for buying and selling securities reated by the National Association of Securities Dealers (NASD) to enable investors to trade securities on a computerized, speedy and transparent system

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NASDAQ

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an amount of money borrowed by someone, usually from a bank that must be repaid, most likely with interest

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Loan

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A sum paid or charged for the use of money or for borrowing money

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Interest

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A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

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Stocks

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A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate.

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Bonds

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Earnings distributed to stockholders

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Dividends

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A valuable asset that is pledged to ensure loan payments. Ex: A Car

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Collateral

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Loan with equal number of payments of the same amount over a fixed period of time.

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Installment Loan

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Loan that is backed up by collateral

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Secured Loan

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loan guaranteed only by a promise to repay it

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Unsecured Loan

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a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday

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Cash Loan

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a private firm that maintains consumer credit data files and provides credit information to authorized users for a fee

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Credit Bureau

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character, capacity, capital

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3 C's of Credit Are:

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a regulated investment company with a pool of assets that regularly sells and redeems its shares

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Mutual Fund

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A bond that a corporation issues to raise money to expand its business

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Corporate Bond

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A savings account that requires a minimum balance and earns interest that varies from month to month due to the stocks the account invests in

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Money Market Account

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A continuous rise in the price of goods and services and the overal economy

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Inflation

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A general rise in prices that results from a rise in the costs of production.

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Cost-Push Inflation

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Measures the number of people who are able to work, but do not have a job during a period of time.

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Unemployment

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A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

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Frictional Employment

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unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

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Structural Employment

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unemployment that rises during economic downturns and falls when the economy improves

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Cyclical Unemployment

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unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season Ex: Santa Claus

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Seasonal Employment

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consumers buy more of a good when its price decreases and less when its price increases

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Law of Demand

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beyond some point, extra product attributed to each additional unit of labor will decline

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Law of Diminishing Marginal Utility

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Factors other than price that determine the amount demanded of a good or service

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Determinants of Demand (Shifts in Demand)

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a market where one supplier has no competition

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Monopoly

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A. Taxes B. Govt. Spending

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What 2 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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A. Discount Rate B. Sets reserve requirements C. Can affect money supply

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What 3 tools are used to create Monetary Policy?

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The Fed

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Who uses these Monetary Policy tools?

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Inflation (Rise of Prices)

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What are Monetary and Fiscal Policies attempting to control?

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A. Classical B. Wealth of Nations C. D. Enlightened Self-Interest E.

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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 (Grow)

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The FED can use _______monetary policy to speed up economic growth and during a recession.

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Contractionary (Slow)

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The FED can use _______ monetary policy to slow down rapid growth in order to control inflation

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The Federal Open Market Committee. Makes decisions that affect the economy as a whole.

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FOMC

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A state of limited competition, in which a market is shared by a small number of producers or sellers.

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Oligopoly

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North American Free Trade Agreement; allows open trade with US, Mexico, and Canada

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NAFTA

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A legal minimum on the price at which a good can be sold

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Price Floor

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The idea that free markets can regulate themselves

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Classical Economics

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An externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.

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Negative Externality

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A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.

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Perfectly Competitive Market

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A tax for which the percentage of income paid in taxes increases as income increases

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Progressive Tax

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