Chapter 2 Flashcards
Is the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among competing groups and individuals.
Economics
Name and describe the two types of economics
Macro economics looks at the operation of a nations economy as a whole
Micro economics looks at the behavior of people and organizations in markets for particular products and services.
Define resource development
The study of how ti increase resources and make better use of them.
This is the process that turns self directed gain into social and economic benefit for all.
The invisible hand
What was the major flaw in Adam Smiths thinking?
That those who generated large amounts of wealth would naturally reach out to those less fortunate.
He underestimated greed.
Define capitalism
the economic system where much or most of the factors of production are privately owned.
What is State Capitalism
A combination of capitalism with state controls
what are the four rights under fire market capitalism
- Right to own property
- Right to own a business and keep profits
- Right to freedom of competition
- Tight to freedom of choice.
What is a free market
One where decisions are based on market demands
define Supply
The quantity of products businesses are willing to sell at different prices at a specific time.
Define Demand
the quantity people are willing to buy at different prices at a specific time
What is the equilibrium point
Is the the supply curve and demand curve meet, this becomes the market price
What is Perfect Competition
Enough sellers that no-one controls price and products are similar.
What is Monopolistic Competition
Large number of sellers with similar products that are perceived as different through branding and marketing.
What is Oligopoly competition
When a few sellers dominate the market with similar products at similar prices.
What is a Monopoly
When one seller controls the supply and demand
What is Socialism
an economic system where the government should won most basic businesses and distribute profits back to citizens.
What is Communism
a political system where the government makes almost all economic decisions and owns most factors of production.
What are some drawbacks to Socialism and Communism
- Fewer freedoms
- Less incentive for entrepreneurs
- Higher Taxes
- Less innovation
What is brain drain
When a societies brightest and most capable leave the country because of high taxes and limited freedoms.
What’s the difference between free market and command market
Free market allows the market to make decisions about S&D, profits, etc,
Command markets are controlled more by government.
what is GDP
Gross Domestic Product, total value of final G&S produced in a country
This is considered a better economic health measurement than GDP
Gross Output measures total sales at all stages of production
What does the unemployment rate measure
People 16 and up who are actively looking for a job
What does the “real unemployment rate” measure
combines unemployment rate with number of under employed, and those who have quit looking
What are three economic indicators in the US
The GDP, Unemployment Rate, and Consumer Price Index
What is fiscal policy
government efforts to keep a stable economy by raising/lowering taxes and increasing/decreasing gov spending.
What is monetary policy
government efforts to keep a stable economy by raising/lowering interest rates and controlling amount of money in circulation.
