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Economics > Chapter 1- The Economic Problem > Flashcards

Chapter 1- The Economic Problem Flashcards

0
Q

What are economic resources?

A

Items used in all types if production.

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1
Q

What is the economic problem?

A

The problem of having unlimited wants but limited resources (scarcity) to satisfy these wants

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2
Q

What are the 3 types of economic resources?

A
  1. Natural Resources
  2. Human Resources
  3. Capital Resources
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3
Q

What are the three types of Resource Incomes and which resource do that correspond with?

A
  1. Rent (Natural Resources)
  2. Interest (Capital Resources)
  3. Wages/Profit (Human Resources)
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4
Q

What are the two branches of economics?

A

Microeconomics and Macroeconomics

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5
Q

What is Microeconomics?

A

focusing on specific aspects of economics such as consumer demand/supply, and the role of big businesses

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6
Q

What is Macroeconomics?

A

Focusing on broader matters relating to economic performance as a whole, such as recession, inflation, and unemployment.

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7
Q

What are Economic Models?

A

Laws, principles, or theories

➡️generalizations/simplifications of economic realities used to help people understand workings of the economy

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8
Q

What is “Ceteris Paribus”?

A

the assumption that “all other things remain the same” (hold everything constant)

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9
Q

What is the difference between Positive and Normative economics?

A

Positive is fact while normative is opinion

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10
Q

What is “Utility”?

A

The satisfaction gained from any action

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11
Q

What is the “self interest motive”?

A

people will act to maximize their own welfare

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12
Q

What is opportunity cost?

A

the utility that could have been gained by choosing an action’s best alternative

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13
Q

What is the “production possibilities curve”?

A

a graph that shows the various combinations of output that the economy can produce given the available resources

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14
Q

Why does the PPC bow out to the right?

A

Because of the “law of increasing opportunity costs”

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15
Q

What is the “law of increasing opportunity costs”?

A

the law states that: as long as more than one item is produced, its opportunity cost in terms of the other item increases (curve gets steeper)

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16
Q

What is Economic Growth?

A

an increase in the total output of goods &/or services due to a rise in the amount of available resources or an improvement in technology

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17
Q

what is the economic system?

A

the organization of an economy, represents a country’s distinct set of social customs, political institutions, and economic practices

18
Q

What are the 3 Basic Economic Questions?

A

1) what to produce
2) How to produce
3) For whom to produce

19
Q

What are the types of economies?

A

Traditional; Market; Product; Resource;

Command; Modern Mixed; Traditional Mixed

20
Q

Describe a Traditional Economy

A

economic decisions depend on custom, resistant to change due to tight social customs, division of labour between men and women.

21
Q

Describe a Market Economy

A

economic decisions based on private ownership and use of markets, individuals free to pursue their own self-interest, often referred to as Capitalism, gov’t only upholds the legal system and maintains public security.

22
Q

Describe a Product Market

A

consumer products are traded here

23
Q

describe a Resource Market

A

economic resources are traded here

24
Q

What are the benefits of a Market Economy?

A
  • customer sovereignty
  • Prices
  • Encourages Innovation
25
Q

Drawbacks of a Market Economy?

A
  • Income Distribution
  • Market Problems
  • Instability
26
Q

Describe a Command Economy

A

economic system based on public ownership and central planning, opposite of a market economy, gov’t is central planners

27
Q

Benefits of a Command Economy?

A
  • Income Distribution

- Economic Growth

28
Q

Drawbacks of a Command Economy,

A
  • Planning Difficulties
  • Inefficiencies
  • Lack of Freedom
29
Q

Describe a Modern Mixed Economy

A

economic system that combines the use of markets and a significant gov’t presence, very popular, role of gov’t varies in each country, unclear distinction between public/private sector

30
Q

Describe a Traditional Mixed Economy

A

economic system that has a traditional sector and a modern sector, rare

31
Q

What are the 7 Economic Goals?

A
  1. Economic Efficiency
  2. Income Equity
    3, Price Stability
  3. Full Employment
  4. Viable Balance of Payments
  5. Economic Growth
  6. Environmental Sustainability
32
Q

What is Economic Efficiency?

A

getting highest benefit from an economy’s scarce resources; employing scarce resources in a way that maximizes utility

33
Q

What is Income Equity?

A

when a county’s total output is distributed fairly; begs the question “what is fair?”; defining/satisfying the goal of income equity is controversial

34
Q

What is Price Stability?

A

gov’t tries to minimize inflation; single dollar falls in purchasing power; goods cost more but incomes don’t always rise

35
Q

What is Full Employment?

A

gov’t tries to minimize involuntary unemployment; unemployment rate is the % of a labour force thats involuntary unemployed; higher unemployment rate means a lower total output than what could be produced

36
Q

What is Viable Balance of Payments?

A

balance-of-payments accounts us a summary of all transactions between Cad. and foreigners that involves exchanging Cad. $ for other currencies; imports/exports and financial flow in/out of the country needs to be more or less evenly matched

37
Q

Why is Economic Growth an Economic Goal?

A

helps raise the average standard of living for Cad; Cad’s in 2000s were better off than in 1920s

38
Q

What is Environmental Sustainability?

A

quality of our physical environment can be sustained w/o sig. harm; to minimize damage economic activity must be adjusted

39
Q

What are Complementary Goals?

A

when reaching 1 goal makes the next easier to succeed; eg. full employment and economic growth

40
Q

What are Conflicting Goals?

A

when reaching 1 goal makes the next harder to succeed; 1 goal is achieved at the cost of another; can mean that a country’s resources are being used less efficient than before; eg. price stability and full employment, income equity and economic efficiency

41
Q

What is inflation?

A

inflation is a rise in the general level of prices

42
Q

What do Central Planners do?

A

Central planners decide what should be produced/how it should be produced and how it should be distributed

Economics (5 decks)

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