Economics and Personal Finance Study Guide – Flashcards
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The lowest legal price a commodity can be sold at. It is used by the government to prevent prices from being too low
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Price Floor
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A graph showing how the demand for a commodity or service varies with changes in its price
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Demand Curve
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What prices will result from a lack of competition
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Higher Prices
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A decline in the economy that lasts at least six months which leads to a decrease in overall prices
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Recession
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An increase in the overall level of prices for goods
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Inflation
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When one alternative is chosen over another, the option not chosen is considered an _________________
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Opportunity Cost
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Things required for survival
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Needs
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The price at which quantity demanded meets quantity supplied
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Equilibrium
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The amount of a good or service that businesses have available to sell
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Supply
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A rivalry between two or more businesses trying to sell products to the same customer or market
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Competition
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People who buy products
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Consumers
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When there is not enough of something for everyone who wants it
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Scarcity
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The number of products consumers want
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Demand
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The highest price businesses can charge for a product
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Price Ceiling
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To attain "positive externalities" the government tries to develop an educated workforce
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Encouraging Education
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The study of the choices that people and organizations make to satisfy their wants and needs
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Economics
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A person who uses their ideas and takes risks in order to create a new business
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Entrepreneur
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The human, natural, and capital resources that are used to produce a product or service goods things that we consume to satisfy our wants and needs
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Factors of Production
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The item is considered a necessity, so a price change does not significantly affect the demand of the item
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Inelastic
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How much the demand for an item changes based on a change in the price of that item
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Elasticity
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Upward or downward movement economic activity that is effected by Unemployment, GDP, and Inflation
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Business Cycle
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The phase of the Business Cycle, consumers spending is at its maximum
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Peak
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The phase of the Business Cycle consumers and businesses limit spending
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Contraction
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The phase of the Business Cycle, consumers and businesses buy only essential goods
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Trough
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When people lose their jobs due to a recession or downturn in business activity
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Cyclical
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When someone can't find a job because they don't have any skills that companies currently want
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Structural Unemployment
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People are more interested in finding a job that best suits them rather than taking the first job that comes along
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Frictional Unemployment
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Number Unemployed / Total Labor Force = ___________________
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Unemployment Rate
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Determines how many jobs were created or lost during the past month, and helps predict whether the economy will grow or shrink in the near future
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Unemployment Rate
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This type of inflation occurs when it costs companies more to produce things
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Cost Push Inflation
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This type of inflation is caused when supply and demand are out of balance
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Demand Pull Inflation
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Index that measures how prices change over time for urban consumers
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Consumer Price Index
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The rate at which the price level of goods and services rises
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Inflation
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The GDP equation is
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C+I+G+(X-M)
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The M in the CPI equation, is the total value of all goods bought from foreign countries
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Imports
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The X in the CPI equation is total value of all goods sold to foreign countries
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Exports
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The G in the CPI equation, all the money spent by the government
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Government Spending
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The I in the CPI equation is the total amount of money spent on business investment
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Investment Spending
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GDP / Population = ____________
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GDP Per Capita
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The measure of the value of goods and services produced by a country in one year:
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GDP
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An agency of the United States federal government that responsible for the promotion of consumer protection and the elimination and prevention of anti-competitive business practices
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Federal Trade Commission
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An agency of the United States federal government that holds the primary responsibility for enforcing the federal securities laws and regulating the securities industry
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The Securities and Exchange Commission
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When the government takes private property for public use and compensates the owner
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Eminent Domain
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Governmental agency that is responsible for protecting the environment
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U.S. Environmental Protection Agency
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Laws that protect consumers when they enter agreements with others
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Contract Law
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Laws that protect the symbols that represent businesses and products
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Trademark
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Laws that protect original works of art, music, books, poems, etc
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Copyright
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If you invent a new product, your invention is protected by which type of property rights laws
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Patent
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Right to own physical goods and intellectual property rights
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Property Rights
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Government agency that deals with the safety of consumer products, like toys
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Consumer Product Safety Commission
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Government agency that deals with farming issues
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U.S. Department of Agriculture
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Government agency that regulates the safety of cosmetics
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U.S. Food and Drug Administration
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Results when the government spends more money than it is receiving
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Deficit
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Government agency that helps Congress develop guidelines for different appropriations
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U.S. Office of Management and Budget
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The difference between all federal deficits and all federal surpluses
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Federal Debt
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A federal agency that increases the amount of money in circulation
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U.S. Federal Reserve System
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Reflects the rise and fall of economic activity relative to the long-term growth trend of the economy
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Business Cycles
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Federal agency that sets safety standards and monitors safety of all consumer products
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U. S. Consumer Product Safety Commission
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Governmental agency regulates monetary policy
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U.S. Federal Reserve System
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An economic system that combines both the Market economic system and the Command economic system
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Mixed Economy
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In a command economy, who owns the factors of production
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Government
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What is the philosophy that the government should not interfere in the marketplace
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Laissez Faire
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When a nation imports more goods and services than it exports
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Trade Deficit
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Economic system where economic decisions are guided by customs, culture, and tradition
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Traditional Economy
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When two or more companies combine to form a single, larger company
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Merger
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Economic system where economic decisions are made solely by the government
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Command Economy
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Economic system where business activity and resources are not regulated by the government
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Market Economy
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Environment where companies sell identical products and buyers have perfect information
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Perfect Competition
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Occurs when two or three companies control a market
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Oligopolies
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Occurs when the biggest company in an industry, has a huge cost advantage over their competitors
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Natural Monopoly
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When there is only "ONE" business in an industry; often these companies are costly and inefficient
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Monopoly
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Encourages businesses produce at the lowest possible cost
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Competition
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Refers to the skills and knowledge a person has acquired through experience and/or education
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Human Capital
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Man‐made things that help people do their jobs better
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Capital Goods
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The amount of output that is produced based on the inputs used
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Measure of Productivity
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Revenue - Costs = __________
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Profit
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Total money received from sales
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Revenue
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Groups of people who decide to pool their resources to buy and sell more efficiently than they could independently
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Cooperative
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The main disadvantage of corporations
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Double Taxation
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A type of corporations that sells shares of stock to the public on the stock exchange
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Public Corporation
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A type of corporations that is owned by a group of people; the company stock is not traded on any stock exchange
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Private Corporation
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A legal entity that can earn a profit, lose money, be sued, and be found guilty of a crime...owners are called stockholders
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Corporation
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A partnership some partners can only lose what they invested in the business:
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Limited Partners
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A business that is owned and operated by one person
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Sole Proprietorship
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A firm's long-run average cost decreases as production increases
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Economies of Scale
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Rent payments is an example of ________; these company costs do not change often
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Fixed Costs
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Labor is an example of ________; these company costs change often
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Variable Cost
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In a partnership, which partner takes on the highest risk of loss when running a business
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General Partners
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How much liability do Partnerships and Sole Proprietorships have
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Unlimited Liability
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A business type that allows for two or more owners to combine talents
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Partnerships
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An independently owned business regulated by a parent company in which the risk of failure is lower than if one opened a brand new business
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Franchise
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In the circular flow model, businesses are responsible for...
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Production
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In the circular flow model, households are responsible for...
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Consumption
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Includes: capital, land, labor, and entrepreneurship
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Factor Market
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In the circular flow model, what do business firms "use" to make products
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Capital Goods
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In the circular flow model, what do business firms "supply" to households
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Products
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In the circular flow model, what do business firms "demand" from households
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Human Resources
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The path that products and resources take to provide goods
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Circular Flow
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A person that combines ideas with effort and risk to create a marketable product
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Entrepreneurship
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Companies move production to other countries
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Offshoring
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Companies send work via the Internet to workers in other countries
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Outsourcing
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A place for buyers and sellers of world currencies to conduct business
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Foreign Exchange Market
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Businesses that operate in more than one country
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Multinational Corporations
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Banks and investors can move their money from one country to another easily in pursuit of profit
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Interconnected Financial Markets
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Advances that have reduced physical distances between countries
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Transportation and Communication
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Nations which compete for and utilize the same resources, goods, services, labor, and knowledge
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Economic Interdependence
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An organization created to administer trade agreements, resolve disputes, and provide a venue for negotiating among its one hundred fifty member nations
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World Trade Organization
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An economic and political union of twenty‐seven European countries
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The European Union
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A trade agreement designed to eliminate trade barriers between the U.S., Canada, and Mexico
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NAFTA
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Cutting off most or all trade with another country
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Embargo
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Taxes on imported goods designed to protect domestic companies
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Tariffs
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A legal limit that a country places on how many goods of a specific type can be imported from another country
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Quota
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Any law that is passed with the purpose of limiting free trade among nations
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Trade Barrier
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The amount of currency it takes to buy one unit of currency in another country
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Exchange Rate
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A country is consuming more than it is producing, and money is flowing from the country country to its trading trading partners
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Trade Deficit
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A country is producing more than it is consuming, and money is flowing from its trading partners to its economy
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Trade Surplus
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The difference between the value of goods that a country exports and imports
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Balance of Trade
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Measures who or what can produce a good or service with the lowest opportunity costs
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Comparative Advantage
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A country can produce the good at a lower cost using the same or reduced amount of resources
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Absolute Advantage
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Goods or services purchased from another country
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Imports
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Goods or services that are sold to another country
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Exports
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Money that is given to you without you having to do anything to earn it
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Unearned Income
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A pay rate that is based on each hour you work
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Hourly Wages
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A wage that is quoted in a flat amount and is not calculated based on the number of hours you work
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Salary
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Extra amount of money that an employee may receive for meeting a goal or going above and beyond the job requirements
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Bonus
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A salesperson will receive a percentage of the sale and only get paid if a sale is made
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Commission
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Overtime is calculated by
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multiplying the regular hourly rate by 1.5
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A document that describes your work experience, education, abilities, interests, and references
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Resume
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A personal business letter that introduces you to a potential employer and describe some of your qualifications
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Cover Letter
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Higher levels of education results in...
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Higher Income Levels & Lower Unemployment
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Another phrase used to describe Net pay
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Take Home Pay
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On your W-4 Form, the more ___________ you claim, the less tax will be deducted each pay period
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Allowances
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The total amount of pay before any deductions of any type are withdrawn from the pay
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Gross Pay
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The actual amount of your paycheck and what remains after voluntary and required deductions are subtracted from gross pay
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Net Pay
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Unpaid jobs that will increase your knowledge and increase your human capital.
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Internships
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A strategy that will help you prepare for an interview
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Researching the company you are interviewing with
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The government's powers to tax and spend. An example of this is the "Cash for Clunkers" program that President Obama initiated in 2010
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Fiscal Policy
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The government's powers to print money and control interest rates to promote economic growth
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Monetary Policy
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What organization is responsible for Monetary Policy
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The Federal Reserve
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Resources are ___________
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Limited
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Wants and Needs are ___________
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Unlimited
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The correct order of the PACED decision making process
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1. Define the problem 2. Identify the alternatives 3. Select the criteria 4. Evaluate pros & cons of each alternative 5. Make a decision
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The additional effort or price of producing or using one more unit of a good or service.
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Marginal Cost
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The satisfaction that one receives from one more unit of a good or service.
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Marginal Benefit
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Types of economic system
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1. Traditional Economy 2. Market Economy 3. Mixed Economy
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Represents how much of a product or service is desired by buyers
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Demand
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Represents the total amount the market is currently producing
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Supply
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The major functions that the government has within the economy
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1. Maintain Legal and Social Framework 2. Maintain Competition 3. Provide Public Goods and Services 4. Redistribute Income 5. Correct for Externalities 6. Stabilize the Economy
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The correct order for the flow of money in the Circular Flow Model
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1. Households buy goods and devices 2. Money from sales goes to business 3. Businesses spend money to pay for resources 4. Individuals receive money form businesses through salaries
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Will result if many companies start making a product that is high in demand
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Prices will Decrease
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Will result if demand for a product increases
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Prices will Increase
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U.S. Food and Drug Administration (acronym)
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FDA
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U.S. Department of Agriculture (acronym)
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USDA
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Securities and Exchange Commission (acronym)
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SEC
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Federal Communications Commission (acronym)
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FCC
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Environmental Protection Agency (acronym)
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EPA
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Federal Trade Commission (acronym)
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FTC
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The Social Security tax
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4.2%
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The Medicare tax
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1.45%
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The FICA tax
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7.65%
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Required employee deductions
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1. FICA 2. Federal Taxes 3. State Taxes
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Parts of a resume
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1. Personal Information 2. Career Objective 3. Education 4. Experience 5. Skills or Additional Qualifications 6. References
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The three types of business structures
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1. Sole Proprietorship 2. Partnership 3. Corporation
