Economics Final Exam 2017 – Flashcards
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can be a function of time and geography; economics is based on this
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scarcity
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how people satisfy their needs and wants by making choices
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Economics
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physical objects like shoes or shirts
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goods
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actions that one person performs for another
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services
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land, labor, capital
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3 factors of production
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natural resources used to make goods
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land
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people getting paid to do the work
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labor
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finished resources to be sold; money
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capital
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person that starts their own business
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entrepreneur
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the best thing given up by making a certain decision
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opportunity cost
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method used to produce and distribute goods and services
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economic system
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love of your country
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patriotism
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level of economic success
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standard of living
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uses custom to decide how to produce and consume goods and services
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traditional economy
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free exchange to decide how to produce and consume goods and services
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market economy
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government decides how to produce and consume goods and services
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command economy
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market economy with government involvement
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mixed economy
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uses command economy; everyone makes the same amount of money
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communism
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uses market economy; money may just be some competition
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capitalism
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nation concerned with food, sanitation, disease, and a growing population
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least developed nation
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nation with workforce, sanitation, and longer life expectancies
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developing nation
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technological, healthcare, diverse economy, and steady population
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developed nation
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individuals make economic choices and start businesses in a free market
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free enterprise
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around the 1900s started Standard Oil, the largest oil company in history
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J. D. Rochefeller
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around the 1900s started US Steel and became the richest person in US history
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Andrew Carnegie
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started Microsoft and became a billionaire
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Bill Gates
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Force that makes people and organizations improve
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profit motive
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anyone can compete in the free market
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open opportunity
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people can decide what they want to buy and sell
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voluntary exchange
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Study entire economies
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macroeconomics
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Study small economic units, like families or businesses
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microeconomics
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value of goods and services in an economy
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Gross Domestic Product (GDP)
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boom, slow down, recession, prosperity
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4 phases of the business cycle
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involves the government
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public-sector
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involves individuals and businesses
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private-sector
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government aid to the poor
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welfare
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money from government to every American over 65
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social security
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Government health insurance to people over 62
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medicare
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government health insurance to lower income people
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medicaid
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desire to own something and the ability to pay for it
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demand
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when price is lower consumers will buy more
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law of demand
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as price rises alternatives are found
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substitution effect
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demand is very sensitive to a change in price
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elastic demand
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demand is not very sensitive to a change in price
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inelastic demand
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the portion of a market controlled by a particular company or product
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market share
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The amount of goods available
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supply
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income, consumer expectations, population, advertising
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4 factors leading to a change in demand
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The higher the price the more that is produced
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law of supply
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costs that don't change no matter how much has produced
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fixed cost
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costs that rise or fall depending on the quantity produced
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variable cost
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fixed and variable costs together
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total cost
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The additional cost of producing one more unit
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marginal cost
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Government payment that supports a business or market
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subsidy
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tax on production or sale of a good
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excise tax
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maximum price that can be charged for a good
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Price ceiling
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minimum price that can be charged for a good
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Price floor
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quantity supplied is more than quantity demanded
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surplus
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quantity demanded is more than quantity supplied
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shortage
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A sudden shortage of a good
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supply shock
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allocating scarce goods and services without prices
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rationing
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Business without regard for government control
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Black market
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said businesses need to find what people want and provide it, in 1776 (The wealth of Nations)
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Adam Smith
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costs of production that affect people involved
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spillover costs (externalities)
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large number of firms produce the same product
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perfect competition
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product that is the same no matter who produces it
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commodity
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A market dominated by a single seller
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Monopoly
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market that runs better with one firm supplying the output
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natural monopoly
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license that gives the inventor exclusive right to sell it for a certain amount of time
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patent
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right to sell a good or service
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franchise
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ability of a company to change prices and output
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market power
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many companies sell products that are similar
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monopolistic competition
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making a product different than other similar products
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differentiation
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A few large firms that dominate the market
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oligopoly
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firms agreed to charge one price for the same goods
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price-fixing
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Organization of producers that agreed to coordinate prices and production
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cartel
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combination of two or more companies
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merger
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removal of some government controls over a market
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Deregulation
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Government issued right to operate a business
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Business license
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City law that separates areas for business or residency
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zoning law
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legally bound obligation to pay debts
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liability
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payment other than wages or salaries
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fringe benefit
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money or valuables belonging to a business
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assets
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Federal Deposit Insurance Corporation
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FDIC
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education increases productivity and results in higher wages
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Learning affect
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completion of college shows employers that applicant is intelligent and hard-working
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screening effect
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Someone who owns stock in a particular corporation
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shareholder
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elected by shareholders to make decisions for a corporation
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The board of directors
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temporary or part-time job
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contingent employment
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value of output
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productivity
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Organization for workers that tries to improve working conditions, wages, and benefits
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Labor union
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organized work stoppage to make employer address union demands
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strike
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works in an industrial job and receives wages
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blue-collar worker
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works in a professional or clerical job; usually earning a salary
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white-collar worker
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neutral person meets with each side to try to find a solution that both sides will except
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mediation
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third-party reviews the case and imposes a decision that is legally binding
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arbitration
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Exchange of one set of goods or services for another
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barter
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anything that serves as a medium of exchange
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money
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determines the value during the exchange of goods and services
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medium of exchange
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keeps its value if stored rather than used
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Store of value
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coins and paper bills used as money
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Currency
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objects that have value in themselves and are also used as money
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commodity money
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objects that have value because the holder can exchange them for something else of value
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representative money
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Government makes it "legal tender" to pay debts
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Fiat money
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institution for receiving, keeping, and lending money
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Bank
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System in which paper money and coins are equal to a certain amount of gold
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Gold standard
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all money available in the US economy
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money supply
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pools money to purchase short term "lower risk" investments
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Mutual fund
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failure to pay back a loan
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default
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type of loan that is used to buy real estate
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mortgage
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entitles holder to buy goods and services based on promise to pay
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Credit card
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Price paid for use of borrowed money
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interest
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amount of money borrowed
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principal
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check card withdraws money from checking account
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debit card
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The use of assets to earn income or profit
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investment
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spreading out investments to reduce risk
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diversification
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A collection of financial assets
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portfolio
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an investment report to potential investors
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prospectus
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money investor receives above the amount initially invested
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return
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receive interest for loaning money to a business or the government
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Bond
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when payment to a bondholder is due
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maturity
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yearly rate of interest on a bond
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yield
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low-denomination bond issued by the US government
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savings bond
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Agency of government that regulates financial markets
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securities and exchange commission (SEC)
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a lower-rated, potentially higher-paying bond
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junk bond
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market where money is lent for longer than a year
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Capital market
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market where money is lent for less than a year
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money market
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portion of a stock
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share
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profits paid to stockholders, usually every quarter
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dividends
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difference between higher selling price and lower purchase price
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Capital gain
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difference between lower selling price and higher purchase price
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Capital loss
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person who links buyers and sellers of stock
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stockbroker
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Business that specializes in trading stocks
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brokerage firm
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market for buying and selling stock
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stock exchange
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looking for a job
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frictional unemployment
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because of harvest schedules or industries that shut down for the season
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seasonal unemployment
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workers skills don't match the jobs that are available; Jobs are replaced, probably by technology
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structural unemployment
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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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being overqualified or working part time when you want to work full-time
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underemployed
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General increase in prices (shows that the economy is growing)
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inflation
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rising wages the cause higher prices, and higher prices causes higher wages
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wage price spiral
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income is insufficient to support a family or household
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poverty threshold
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Government issued coupons that recipients exchange for food
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food stamps
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where companies can locate free of certain local, state, and federal taxes
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Enterprise zone
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required payment to a local, state, or national government
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tax
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tax on a person's earnings
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income tax
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tax on the value of a good being sold
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sales tax
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tax on the value of property
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property tax
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tax on the value of a company's profits
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corporate tax
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percentage paid remains the same for all incomes
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proportional tax
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percentage paid increases as income increases
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Progressive tax
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percentage paid decreases as income increases
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regressive tax
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good sent to another country for sale
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export
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good brought in from another country for sale
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import
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preventing a product or service from entering a nation
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trade barrier
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limit on the amount of a good that can be imported
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import quota
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tax on certain items purchased abroad
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customs duty
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tax on imported goods
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tariff
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began in 1995; goal is for more free global trade
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World Trade Organization (WTO)
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trade organization made up of European nations
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European Union (EU)
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eliminated trade barriers between Canada, Mexico, and the US
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NAFTA (North American Free Trade Agreement)
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value of a foreign nations currency compared to the home nations currency
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Exchange rate
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nation exports more than it imports
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trade surplus
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Organization of economy for purpose of manufacturing
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industrialization
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percentage of population over 15 that can read and write
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literacy rate
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average expected lifespan of an individual
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Life expectancy
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Number of deaths per 1000 that occur in the first year of life
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infant mortality rate
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provides money and resources to poor countries
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World bank
