Unit 1 Economics Review (1-4, 10)

Flashcard maker : Carol Rushing
Scarcity
Scarcity
Lack of resources. Limited resources for satisfying unlimited wants and needs.
Factors of production
Factors of production
all the economic resources needed to produce a society’s goods and services.
Opportunity cost
Opportunity cost
if we decide to use our resources (i.e. money) on one thing, we lose the opportunity to use it on something else at the moment in time.
Natural Resources
Natural Resources
raw materials from nature used to produce goods.
Renewable Resources
can be readily reproduced (i.e water, cattle, wheat, etc)
Non-Renewable Resources
Non-Renewable Resources
limited or less likely renewable (i.e. coal, iron, oil)
Labor Resources
Labor Resources
people needed to make the goods or services
Skill / Unskilled
Physical / Intellectual
Capital Resources
Capital Resources
things used to make goods and services (Equipment, buildings, materials, supplies)
Entrepreneurial Resources
Entrepreneurial Resources
used by people who recognize opportunities and start businesses (These best respond to society’s changing wants and needs)
i.e. The idea to start a business
Economics
the study of how individuals and groups of individuals strive to satisfy their wants and needs by making choices. (The study of how and why people make choices).
Basic Economic Questions
Basic Economic Questions
Questions societies must answer to best use their resources to meet the wants and needs of it’s citizens / inhabitants. (Who? What? How?)
Economic Systems
methods societies use to distribute resources (essentially different ways to answer the three basic economic questions)
Market Economy
Market Economy
economic decisions are made in the market place. Can also be called a free market, private enterprise, or capitalism.
Marketplace
Marketplace
where buyers and sellers meet to exchange goods and services.
Price
Price
the amount of money given or asked for when goods and services are bought or sold.
Supply
Supply
the amount of goods or services producers will provide at various prices.
Demand
the amount or quantity of goods and services that consumers are willing to buy at various prices.
Equilibrium Price
Equilibrium Price
the point at which the quantity demanded and the quantity supplied meet. This is the best case scenario for a market economy.
Profit Motive
Profit Motive
the desire to make a profit, and profit is the reward for taking a risk with your business.
Competition
Competition
encourages businesses to offer higher quality products at lower prices to attract customers.
Command Economy
Command Economy
a central authority (i.e. government) makes the key economic questions. The government dictates what will be produced, how it will be produced, and who will get the goods. It owns and controls all the resources. This is the opposite of a market economy. Highly skilled workers may earn the same as low-skilled workers.
Socialism
moderate command economy. Very few private enterprises may exist.
Mixed Economy
contains both private and public enterprises. few nations have either a pure command or pure market economy.
Service-Based Economy
Early 1600’s, colonists bartered or traded goods and services.
Agriculture-Based Economy
1700’s, farming was a common way of life.
Industry-Based Economy
Mid 1850’s, the industrial revolution enabled the advent of big machines for producing goods.
Information-Based Economy
1900’s, rapid movement of information became possible with inventions of computers and other advanced communications.
Economic Indicators
Figures used to measure economic performance. These include GDP, Standard of living, unemployment rate, inflation, deflation, and national debt. These indicators measure things such as how much a country is producing, whether its economy is growing, and how it compares to other countries.
Gross Domestic Product
The total value of all the goods and services produced in a country in a given year. This is one of the most important economic indicators of the status of an economy.
Standard of living
The level of material comfort as measured by the goods and services that are available. The more goods and services produced per person, the higher this becomes.
Unemployment Rate
Measures the number of people who are able and willing to work but cannot find work during a given period.
Inflation
a general increase in the price of goods and services. The higher this is, the buying power decreases because it costs more to buy goods and services.
Deflation
a general decrease in the price of goods and services. This occurs when the supply of goods is greater than the quantity demanded.
Budget Deficit
When the government spends more on programs than it collects in taxes.
The Federal Reserve
The government agency that that guides the economy by REGULATING the amount of MONEY in circulation AND controlling INTEREST RATES.
Frictional Unemployment
Unemployment caused by changing jobs.
Structural Unemployment
new technology replaces workers, requiring new skills, or companies merge and eliminate jobs. https://o.quizlet.com/–dykhuHCU1IL880y6l8YA_m.jpg
Seasonal Unemployment
workers are only needed part of the year.
Cyclical Unemployment
Unemployment that relates to the trends in growth and production that occur within the business cycle.
FDIC
The Federal Deposit Insurance Corporation is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system
Black Tuesday
October 29, 1929 – Marked the beginning of the great depression.
The Great Depression
1929 to 1933, GDP decreased nearly 50% and unemployment rose more than 800%
Prosperity
A peak in economic activity. Unemployment is low, GDP is high, new businesses open, etc.
Recession
Economic activity slows down. GDP lowers, demand slows down, unemployment increases.
Ripple Effect
down turns in major industries can bring on a recession.
Depression
a deep recession that effects the entire economy and lasts for several years.
Ethics
Moral principals by which people conduct themselves personally, socially, and professionally.
Business Ethics
Rules based on moral principals about how businesses and employees should conduct themselves. (i.e. providing safe products, creating jobs, treating employees fairly, protecting the environment, and being truthful about their financial situation.)
Bribery
Excessive gift giving (considered unethical in the US but not in all countries)
Code of Ethics
A set of guidelines for maintaining ethics in the workplace.
Sweatshop
A shop or factory in which workers are employed for long hours at low wages and under unhealthy conditions.
OSHA
Occupational Safety and Health Administration, sets and enforces work-related health and safety rules.
Conflict of Interest
Conflict between self interest and professional obligations.
Nepotism
the practice among those with power or influence of favoring relatives or friends, especially by giving them jobs.
Social Responsibility
The duty to do what is best for the good of society.
Integrity
the quality of being honest and having strong moral principles; moral uprightness.
FDA
Food and Drug Administration – a federal agency that from dangerous or falsely advertised products. This is one way to help ensure businesses maintain responsibility to customers.
Responsibility to Customers
Examples: Truthful advertising, Fair competition, offering a safe product at a reasonable price, etc.
Responsibility to Employees
Examples: Providing work experience for people with limited job skills, promoting volunteerism, providing employees safe working conditions, equal treatment, and fair pay, etc.
Equal Pay Act
Passed in 1964, requires that men and women be paid the same wages for doing equal work. This gap in wages still exists though.
Americans with Disabilities Act
Bans discrimination against people with physical or mental disabilities. More than 50 million workers are likely to be covered by this law.
Responsibility to Society
Examples: businesses should protect the environment.
EPA
Environmental Protection Agency (est. 1970) – enforces rules that protect the environment and control pollution.
Sarbanes-Oxley Act
Mandates truthful reporting and makes the CEO more accountable for the actions of the financial managers of a firm.
Volunteerism
the use or involvement of volunteer labor, especially in community services.
Global Economy
the interconnected economies of the nations of the world.
International trade
involves the exchange of goods and services between nations.
Multinational Corporation
a company that does business in many countries and has facilities and offices around the world. i.e Sony, McDonald’s, etc.
Trade
Has multiple meanings, such as, a specific area of business or industry, skilled occupation, people that work in a specific area of business, or lastly as an activity of buying and selling goods and services in domestic or international markets.
Domestic Trade
the production, purchase, and sale of goods and services WITHIN a country.
World Trade
the exchange of goods and services across international boundaries. This is necessary because a country may not have the necessary means or raw materials to produce or offer the good themselves.
Imports
Goods and services that one country BUYS from another country.
Exports
Goods and services that one country SELLS to another country.
Specialize or specialization
to focus on a particular activity, area, or product. This builds and sustains a market economy.
Comparative Advantage
the ability of a country to produce a particular good or service more efficiently than another country or company.
Currency
Another name for money, with which countries have to pay for products and services.
Foreign Exchange Market
to trade with another country, businesses and countries must convert their money into that nation’s currency, which takes place in this market.
Exchange Rate
The price at which one currency can buy another currency. These rates change daily. The amount a country’s currency is worth depends on the number of other countries that want to buy it.
Price
Companies follow the change in exchange rates to find the best prices for products.
Protectionism
the practice of the government putting limits on foreign trade to PROTECT businesses at home.
Trade Barriers
To limit competition from other countries.
Tariff
a tax placed on imports to increase their price in the domestic market.
Quota
a limit on the quantities of a product that can be imported.
Embargo
a ban on the import or export of a product. These are rare and usually are used against another country for political or military reasons.
Free Trade
Occurs when there are few or no limits on trade between countries.
Trade Alliances
Nations form these in order to reduce limits on trade.
NAFTA
North American Free Trade Alliance, formed between USA. Canada, and Mexico.
EU
European Union, a trade alliance between Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
ASEAN
Association of Southeast Asian Nations, a trade alliance between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
Balance of Trade
the difference in value between a country’s imports and exports over a period of time.
Trade Surplus
A country exports more than it imports.
Trade Deficit
A country imports more than it exports.

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