Ch2- Basic Economics Flashcards
What is an economic crisis?
Businesses and consumers are unable to pay their debt causing a liquidity shortage
What is economy?
Financial system of how resources flow through society, from production to distribution to consumption
What is economics?
Study of choices we make in a way in which we allocate our resources (scarcity )
What is macroeconomics?
Overall situation of a country (the big picture)
What is microeconomic ?
Study of a smaller economic unit (individuals and businesses)
What are economic indicators?
Gives information about economic health and activity, analyzing past performances to help predict future ones
Comparison +benchmarking
What examples of economic indicators and why?
Unemployment : we can see the number of jobs lost and created
Inflation: money and ability to buy goods and services
What is monetary policy and who puts it forward?
Put forward by the bank of canada
Manages money supply and how liquid is the money
Reserve requirement (how much money they need to have on hand)
Open market operation (security, bonds and notes)
What is fiscal policy and who puts it forward? Give 3 main examples
Budget put forward by the government party
It influences the economy through taxation and spending.
Budget surplus
Budget deficit
Debt
What is budget surplus?
When taxes are greater that your spending
What is budget deficit?
When taxes are lower than your spending
What’s is debt?
All deficit added together
What are the 4 main types of economy?
Capitalism, socialism, communism, mixed market
What is capitalism?
Free market system based on private ownership and economic freedom
What are the fundamental rights of capitalism?
Right to own a business and keep after-tax profit
Right to private property
Right to free choices(buy or not buy)
Right to fair competition
What is socialism?
The government controls key industries that need protection or are national interest
+higher taxes to distribute wealth evenly
Cheaper medication and education
What is communism?
Economic and political system that calls for public ownership of virtually all enterprise are under the direction of a strong central gouvernment
What is mixed market?
Mix of different type of economies, most economies in the world fall under this category
What are the four degrees of competition?
Monopoly
Oligopoly
Monopolistic competition
Pure competition
What is monopoly?
One single producer controlling the entire economy
It leaves no significant room for competitiors
What is oligopoly?
Makes it hard to break into a market, very little price competition(price fixing ) and few sellers
What is monopolistic competition?
Many sellers, all are different sizes. Differentiated based on quality,branding, price
What is pure competition?
Products sold are nearly identical, the competition. Is purely based on price.
No producer controls the market
What is the law of demand?
People will be more willing and able to buy more of a product if the price is lower
