Chapter 2 Flashcards

1
Q

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.

A

Economics

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2
Q

Name and describe the two types of economics

A

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.

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3
Q

Define resource development

A

The study of how ti increase resources and make better use of them.

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4
Q

This is the process that turns self directed gain into social and economic benefit for all.

A

The invisible hand

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5
Q

What was the major flaw in Adam Smiths thinking?

A

That those who generated large amounts of wealth would naturally reach out to those less fortunate.

He underestimated greed.

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6
Q

Define capitalism

A

the economic system where much or most of the factors of production are privately owned.

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7
Q

What is State Capitalism

A

A combination of capitalism with state controls

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8
Q

what are the four rights under fire market capitalism

A
  1. Right to own property
  2. Right to own a business and keep profits
  3. Right to freedom of competition
  4. Tight to freedom of choice.
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9
Q

What is a free market

A

One where decisions are based on market demands

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10
Q

define Supply

A

The quantity of products businesses are willing to sell at different prices at a specific time.

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11
Q

Define Demand

A

the quantity people are willing to buy at different prices at a specific time

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12
Q

What is the equilibrium point

A

Is the the supply curve and demand curve meet, this becomes the market price

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13
Q

What is Perfect Competition

A

Enough sellers that no-one controls price and products are similar.

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14
Q

What is Monopolistic Competition

A

Large number of sellers with similar products that are perceived as different through branding and marketing.

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15
Q

What is Oligopoly competition

A

When a few sellers dominate the market with similar products at similar prices.

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16
Q

What is a Monopoly

A

When one seller controls the supply and demand

17
Q

What is Socialism

A

an economic system where the government should won most basic businesses and distribute profits back to citizens.

18
Q

What is Communism

A

a political system where the government makes almost all economic decisions and owns most factors of production.

19
Q

What are some drawbacks to Socialism and Communism

A
  1. Fewer freedoms
  2. Less incentive for entrepreneurs
  3. Higher Taxes
  4. Less innovation
20
Q

What is brain drain

A

When a societies brightest and most capable leave the country because of high taxes and limited freedoms.

21
Q

What’s the difference between free market and command market

A

Free market allows the market to make decisions about S&D, profits, etc,
Command markets are controlled more by government.

22
Q

what is GDP

A

Gross Domestic Product, total value of final G&S produced in a country

23
Q

This is considered a better economic health measurement than GDP

A

Gross Output measures total sales at all stages of production

24
Q

What does the unemployment rate measure

A

People 16 and up who are actively looking for a job

25
Q

What does the “real unemployment rate” measure

A

combines unemployment rate with number of under employed, and those who have quit looking

26
Q

What are three economic indicators in the US

A

The GDP, Unemployment Rate, and Consumer Price Index

27
Q

What is fiscal policy

A

government efforts to keep a stable economy by raising/lowering taxes and increasing/decreasing gov spending.

28
Q

What is monetary policy

A

government efforts to keep a stable economy by raising/lowering interest rates and controlling amount of money in circulation.