question

state capitalism

answer

system in which the owner of much of the nations capital is a powerful centralized apparatus called the collective state

question

capitalist

answer

anyone who owns producer goods or owns a share of some business that produces goods

question

mixed economy

answer

an economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion

question

private capitalism

answer

system in which the majority of nations capital is owned and controlled by private industries and businesses

question

entrepreneur

answer

person who undertakes management of economic enterprises on a bold scale, with some danger of losing his investment of money or time

question

labor

answer

any work that contributes to the production of goods and service

question

Information

answer

considered 5th factor of production. Efficient production depends upon the intelligent blending of these resources

question

4 factors of production

answer

natural resources, labor, capital, entrepreneurship

question

3 types of property:

answer

real, financial, intellectual

question

3 components of capitalism:

answer

property rights, freedom of enterprise/competition, limited gov

question

Substitution Effect

answer

people tend to substitute less expensive goods for ones whose prices have risen

question

Shortage

answer

quantity demanded exceeds quantity supplied

question

Low value=______ demand

answer

low

question

Value in exchange aka:

answer

trading value

question

Price influenced by:

answer

demand

question

Availability substitute major reason for:

answer

why goods tend to be elastic

question

supply

answer

relationship between a goods price and amount producers are willing to supply

question

Marginal Utility

answer

amount of satisfaction that results from one-unit increase of a product; desire tends to become smaller with each additional unit

question

Substitution Effect

answer

people tend to substitute less expensive goods for ones whose prices have risen

question

Shortage

answer

quantity demanded exceeds quantity supplied

question

Demand curve

answer

graphic representation of the amounts of goods purchased at different times

question

Demand

answer

relationship between a goods price and quantity people are willing to pay

question

Elasticity

answer

responsiveness of the quantity supplied or the quantity demanded to change in a goods price

question

Diminishing Marginal Utility

answer

as the supply of a specific good/service increases the satisfaction derived from each additional unit decreases

question

Price falls, quantity demand _______

answer

rises

question

Prices rises, quantity demand ______

answer

decreases

question

Prices rises, quantity supply _____

answer

rises

question

Price falls, quantity supply _____

answer

decreases

question

Canada's health care is example of:

answer

socialism

question

nationalism

answer

promotion of one's own nation and government regardless of moral consideration

question

communism

answer

economic system based upon public ownership and gov. control of the production in distribution of nearly all national resources

question

bourgeois

answer

property owners

question

proletariat

answer

working class people

question

also referred to as Marxism:

answer

communism

question

Measures of gov. in command economy:

answer

confiscation of private property, restraint of economic competition, nationalization of banking system

question

marxist believe man is basically ____

answer

good

question

One of main dangers of socialism:

answer

deception (promises better economic conditions of freedom for nearly everyone)

question

West Berlin

answer

free market

question

East Berlin

answer

communistic

question

Karl Marx advocated the overthrow of:

answer

bourgeois

question

Aim of Marxist economies

answer

equality of conditions

question

Another name for World Bank:

answer

IBRD

question

globalism

answer

philosophy which regards the entire world as one giant community that should be unified politically and economically

question

World Trade Organization "most favored nation" policy:

answer

forces the US to trade with governments which are known to abuse their people

question

Euro

answer

first national currency

question

Repercussions of people at Tower of Babel:

answer

languages were confused

question

3 original members of NAFTA

answer

Mexico, Canada United States

question

Price floor

answer

price level set above the equilibrium price

question

Price ceiling

answer

gov places limits on how much a producer may charge for a product

question

Value in use

answer

value is directly related to the benefits their owners receive through their use

question

Value in exchange

answer

what a particular good is worth in exchange for some other good

question

price

answer

amount of money a buyer pays for an item

question

Subsidies

answer

monetary assistance from the gov to a business

question

Total utility

answer

total amount of satisfaction received from all units added up together

question

industry

answer

group of firms that produce similar products or provide similar services

question

price discrimination

answer

practice of charging different consumers differing prices for identical goods, usually considered illegal

question

trust

answer

group of businesses which have joined together to restrict/eliminate competition

question

oligopoly

answer

market in which there are only a few firms, products are either differentiated or virtually the same, and potential competitors are discouraged from entering the market by significant entry barriers

question

*Characteristics of perfect competition

answer

large number of independent sellers/buyers, industry must be one in which all firms produce a standardized product, firms must have access to the free market, and market information must be made available to all firms/buyers

question

3 characteristics of a monopoly

answer

1) Firm must be the sole supplier of a good/service 2) There must be no close substitutes for the firm's product 3) entry into the market must be blocked

question

Sherman Antitrust Act

answer

law passed in 1890, one of the first and most important of U.S. antitrust laws

question

3 characteristics of monopolistic competition

answer

1) There must be a large number of firms in the market 2) these firms provide differentiated products 3) firms are able to easily enter/exit the market

question

Natural monopoly

answer

monopoly that occurs when a single firm can satisfy demand for a good more efficiently than could multiple firms

question

Legal monopoly

answer

monopoly protected by government

question

perfect competition

answer

(pure competition) market in which there are many sellers and buyers, all firms produce a standardized product, firms have free access to the market, and relevant market info is available to all sellers/buyers

question

monopoly

answer

(imperfect competition) market in which there is only one supplier of a good, no other firms produce a close substitute for that good

question

insurance

answer

contract between two parties in which one party protects the other against types of loss in exchange

question

check

answer

an account holder's written order that authorizes his bank account to withdraw funds from his account

question

GDP

answer

value of all finished goods and services produced within a country during a year's time

question

trough

answer

lowest point of a business cycle

question

stagflation

answer

the economic condition in which high inflation is combined with high unemployment

question

base period

answer

period that serves as a reverence point by which other measurements are compared

question

leading indicators:

answer

economic variables that tend to change prior to and in the directions of the rest of the economy

question

peak

answer

highest point of the business cycle

question

Business cycle

answer

cyclic fluctuation in the level of economic activity

question

CPI

answer

index that measures the change in prices consumers pay to purchase specific goods

question

supply-side economics

answer

theory that reduction of taxes makes more money available for private investment in capital and research, to increase productivity

question

recession

answer

period of economic decline

question

cost-push inflation

answer

occurs when production expenses increase

question

demand-pull inflation

answer

occurs when the high demand for goods forces up the prices that consumers must pay to satisfy their wants

question

Criticisms of market economy:

answer

business fluctuations, inflation of money/prices, competitive economy system is hard, greedy, selfish, and unjust.

question

One of the best ways to judge economy prosperity:

answer

correlate between consumer prices and consumer wages

question

Keynesianism

answer

rejects the idea that supply creates its own demand

question

*Ways gov. can damage their economies:

answer

politic plundering, excessive public expidenture, inflation and debasement of money

question

How law helped market function safely in California

answer

property protected, fraud suppressed, debts collected

question

In free market, most decisions are made in:

answer

private sector

question

Plato quote:

answer

"political state should not interfere with economy...but left to merchants"

question

Who wrote "The Wealth of Nations"?

answer

Adam Smith

question

market signals

answer

signs used by consumers and producers to determine how much of a good to buy or sell at a given price and time

question

black market

answer

illegal, underground system of exchange for goods, developed to avoid governmental regulations

question

economic model

answer

theory which seeks to show the relationship among the various components of an economy

question

goods

answer

tangible (material) items that people want and for which they expect to pay

question

supply

answer

relationship between a good's price and the amount that producers are willing to supply

question

laissez faire

answer

means to "let things alone"

question

prodigality

answer

excessive spending; wastefulness

question

man imitates ____ of God through ownership

answer

sovereignty

question

capital good

answer

a tool or resource used to produce or distribute goods

question

macroeconomics

answer

study of national and global economies and how these major economies are affected by large-scale choices and public policies

question

opportunity cost

answer

the value of the best alternative that is foregone when a different alternative is taken

question

profit motive

answer

the incentive to act in order to acquire money and goods

question

profit

answer

the excess of a producer's total revenue over his total expenditure

question

division of labor

answer

separation of work into individualized tasks

question

physiocrats

answer

French economists that favored a natural economy

question

deflation

answer

the situation that occurs when price levels drop and money increases in value

question

inflation

answer

situation that occurs when market prices rise; usually caused by the presence of too much money being placed in circulation

question

barter

answer

the direct exchange of one good for another without a standard form of money passing from hand to hand

question

factors of production are _____

answer

scarce

question

David Ricardo

answer

he advocated the principals of comparative advantage

question

Elements that determine an investment:

answer

time, rate of return, and amount invested

question

God's intentions for possessions

answer

for them to be personal

question

parable of the talents

answer

each were given according their ability

question

law of economics

answer

principals that govern the production, distribution, and consumption of goods

question

"common course and condition"

answer

system the Pilgrims abandoned

question

When gov. dumps mass money into money supply, this happens:

answer

inflation

question

All goods have to be...

answer

worked for

question

specialization

answer

production of goods in which an individual, organization, or region has an absolute or comparative advantage

question

service

answer

intangible, or immaterial, goods that are produced by labor and for which people expect to pay

question

imperialism

answer

the establishment of colonies and extensive territories created to benefit their mother countries

question

trade balance

answer

difference in value of the goods that a country sells abroad and those it purchases from other countries

question

microeconomics

answer

the study of specific components within a major economy and how the choices made by individuals, households, and and businesses affect an economy

question

want

answer

human desire to posses or use a certain good or service

question

value

answer

the worth that is attached to a good

question

tariff

answer

a tax that a government applies on imported goods

question

market price

answer

amount of money or goods that a good will command in a market

question

common stock

answer

type of stock that allows holders to vote concerning corporate matters

question

preferred stock

answer

type of stock that does not allow holders to vote concerning corporate matters, buy pays its holders dividends before the holders of common stock receive any

question

mutual fund

answer

investment company that combines the resources of all its shareholders and invests the money in a wide variety of stocks, bonds, and other securities

question

stockholder

answer

person who owns shares in a corporation

question

money market account

answer

a savings account that allows limited transactions and pays an interest rate that changes with the demand for loans

question

bonds

answer

documents that guarantees the bondholder the amount of his original investment plus a specified rate of interest by a certain date

question

corporation

answer

an organization that is a legal entity with rights and obligations distinct from those of its owners

question

investment

answer

commitment of resources to a project or purpose that is expected to bring future profit

question

Gresham's Law

answer

idea that people will save forms of money that seem more stable and valuable and spend forms of money that seem less valuable

question

face value

answer

the asserted, or surface, value of money or goods

question

Root of all evil:

answer

love of money

question

monetarism

answer

theory that variation in the money supply is the main source of economic fluctuations

question

money supply

answer

total amount of money in circulation

question

subsistence economy

answer

an economic system that provides barely enough to keep a society functioning

question

command economy

answer

economic system in which a centralized authority controls production, distribution, and consumption of gods, as well as savings, investments, and prices

question

geographic specialization

answer

the production of goods in which a country or region has absolute or comparative advantage

question

total cost

answer

sum cost to a producer for all the factors of production used in making goods

question

average cost

answer

sum cost of all the factors of production used in producing one unit of a good

question

absolute advantage

answer

the ability of an entity to produce goods or provide services more efficiently than its competitors

question

comparative advantage

answer

the ability of an entity to produce a good or provide a service at an opportunity cost that is lower than that of another producer

question

free trade

answer

international exchange of goods free from the governmental tariffs, quotas, or other prohibitive regulations

question

overspecialization

answer

productive inefficiency that results when the division of labor is carried past the point of maximum efficiency

question

traditional society

answer

each child is expected to grow up and become whatever his parents are

question

Industrial societies and capitalism are both:

answer

capitalistic

question

Demand curve chart:

answer

goes down to the right

question

Supply curve chart:

answer

goes up the the right

question

Who determines what goods are produced in a market economy?

answer

consumers

question

Economic system where most black markets appear:

answer

command economy

question

Example of non-durable good:

answer

banana

question

Entry into monopoly is:

answer

blocked

question

benefits of competition:

answer

it allows people to test their own abilities, people get better at making things, it encourages people to do better

question

Hebrides, Scotland is an example of:

answer

how economies can be not competitive

question

Competition among every individual:

answer

is not equal

question

Competition improves the ____ of goods

answer

quality

question

American automobile industry is example of:

answer

oligopoly

question

Competition in ancient Greece:

answer

was very strong

question

advantages of division of labor:

answer

more goods produced per person, more inventions are encouraged, fewer tools needed per worker

question

3 components used by Henry Ford:

answer

division labor, standardized parts, assembly line

question

R&D=

answer

research and development

question

401k ex. of:

answer

defined contribution plan

question

M1 consists of:

answer

various types of transactions accounts, travelers checks, all coins and currency held outside of banks

question

Milton Friedman

answer

one of the most influential economists; associated with monetarism

question

money

answer

anything that is generally accepted as means of payment

question

surplus

answer

supply greater than demand

question

complimentary good

answer

good capable of being used in conjunction with another good

question

Gold and silver have _____ value:

answer

intrinsic

question

Ways government activity can increase in US economy:

answer

social security, unemployment insurance, public education

question

Adam Smith quote:

answer

"the government should not intervene in an economy more than necessary"

question

One of the main problems with supply-side economics:

answer

before money can be given out, taxes must be raised

question

Government borrowing is major cause of:

answer

inflation

question

share

answer

equal portions of a corporation's stock

Economics Semester Final Exam Study Guide – Flashcards

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