Comp 4: Economics Flashcards
Equilibrium (of a Market)
When the quantity supplied is equal to the quantity demanded
Factor Market
A market in which the factors of production are bought and sold
Opportunity Cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
Tax
A contribution to federal or state funds required for individuals or businesses
Capitalism
An economic system characterized by private, rather than government, ownership of industry. Prices, production, and distribution of goods are determined by competition in a free market.
Market Economy
An economic system where decisions about production, consumption and investment are guided by the price of goods and services, which are determined the laws of supply and demand
Deficit
When the quantity demanded exceeds the quantity supplied
Labor Force
All of the people working and willing/able to work, including those who want to work but are unable to find a job
Employment Percentage
The percentage of people employed in an economy
Great Depression
A unprecedented period of worldwide economic downturn. Began in Oct. 1929 with the United States stock market crash. World War II was integral in pulling many countries out of the depression by increasing factory production.
Dividends
Percentages of the profit
Keynesian Economics
Free markets can lead to economic inefficiencies and governmental intervention can lead to a stable, productive economy
Laissez-Faire
Adam Smith’s theory that the government should not interfere in the economy; translates to “let the people do as they choose”.
Gross Domestic Product (GDP)
The total value of all domestic production in a country. GDP sums up the market value of all final goods and services produced in a nation within one year.
Prince Henry The Navigator
Most notable explorer who found alternate trade routes to India through investing in larger and better ships
Consumer Price Index (CPI)
A measure of the economy that uses consumer spending to determine the strength of an economy
Second Industrial Revolution
The unprecedented increase in economic productivity during the late 1800s. Included large leaps forward in technology with expansion of use of electricity, petroleum, and steel.
Trade Cap
A limit to the amount of a good that can be imported or exported
North American Free Trade Agreement (NAFTA)
A trade agreement that created a free trade zone between the US, Canada, and Mexico
Black Plague/Black Death
An outbreak of the Bubonic Plague - a deadly epidemic that struck Europe in the mid-1300s and killed millions
Traditional Economy
An economy where goods are produced mainly for consumption by one’s own family and traded or bartered in only the most basic ways
Stock Market
The market in which a person can buy and sell shares of a company
Economies of Scale
A reduction in the price of per-unit production resulting from producing more at once
Macroeconomics
The design and function of the economy as a whole
Demand
The quantity of a good that consumers desire to purchase at a given time in an economy
Age of Exploration
A period of time from the early 15th Century until the early 17th Century in which European ships traveled around the world in search of new trading routes
Interdependence of Economics
All economics require each other to function
Progressive Era
The rapid economic expansion of the Second Industrial Revolution also led to an increase in the difference between the haves and the have-nots, as well as the growth of oligopolies and monopolies
Adam Smith
The father of capitalism. Wrote “An Inquiry into the Nature and Causes of the Wealth of Nations”. Argued that an invisible hand guides the economy to its greatest productivity.
Absolute Advantage
A ability of an entity to produce more of a good or service than another entity using the same amount of resources
Surplus
When the quantity supplied is greater than the quantity desired
Spindletop
An oil derrick in Beaumont, Texas that became the most productive derrick in the world in 1901, producing over 100,000 barrels in a day and bringing a boom to Texas’ oil and gas industry
Dutch East India Company
One of the first joint-stock companies
Trade Barriers
Obstacles to trade
World Wars
WWI and WWII occurring overseas (with the exception of Pearl Harbor). Allowed the US to maintain and grow its production capacity, leading to massive economic expansions.
Trade Deficit
Buying more than they are selling
Specialization of Labor/Division of Labor
A tendency for groups to focus and work on (specialize) wherever they can make the best product at the highest revenue (comparative advantage) and use trade to acquire other products
Command Economy
Government controls the economy determining what should be produced and how much should be produced. This type of economy is most closely associated with communism.
Competition (Economics)
Companies will strive for a greater share of the market by producing higher quality and more cheaply priced goods
Perceived Value
How desirable a product is to the consumer
Disequilibrium (of a Market)
When either the quantity supplied or the quantity desired exceeds the other
Retaliatory Tariff
When Country A places a tariff on Country B’s imports because Country B placed a tariff on Country A’s imports
Specialization
A tendency for groups to focus and work on (specialize) wherever they can make the best product at the highest revenue (comparative advantage) an use trade to acquire other products
Means of Production
The non-human resources used to produce goods in an economy
Exporting
Selling to other countries
Law of Demand
As the price of a good increases, the less quantity of the good will be demanded
Free Trade
The ability for one country to trade with another without hindrance so that all goods can be produced with the greatest efficiency
Comparative Advantage
The ability of an entity to produce a good or service at a lower opportunity cost than another entity
Communism
A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.
Trade
The exchange of products for money between entities
Supply Side Economics/Reaganomics
The belief that government intervention in trade should focus on increasing the ability of suppliers to produce. This policy dominated the 1980s.
Barrier to Entry
When obstacles prevent new companies from entering the market
Tariff
A tax placed on a specific type of imported or exported good
Microeconomics
The study of individuals and their decisions
Supply
The quantity of a good produced at a given time in an economy
Share
Piece of ownership in a company, mutual fund or other investment
Scarcity
In Economics, the fact that there are not enough resources to fulfill all human needs and desires
Importing
Buying from other countries
Cost-Benefit Analysis
Consideration of what one gains and loses from a set of economic choices
Factors of Production
The determination of when and where economic activity can and most likely will occur: land, labor, capital, and entrepreneurship
Purchasing Power
The ability to buy goods
Subsidies
Government payments to an industry to reduce costs or create false demand
Globalism
Economic and foreign policy planning on a global basis
Price Control
A maximum or minimum limit on the price of a good instituted by the government
Circular Flow
Movement in an economy of good, services, and money from consumers to producers and back again
Price Controls
A maximum price set by the government allowed to be charged for a particular good
Invisible Hand
The economy is not led by an entity, but is the result of individuals acting in their own self-interests
Mixed Economy
A market economy with varying levels of government intervention
Law of Supply
As the price of a good increases, a greater quantity of the good will be supplied
Joint-Stock Company
A company whose stock is owned jointly by shareholders
Merchantilism
The economic idea that a country needs to amass wealth through more exporting than importing and measures wealth by the amount of gold that a nation possesses
Globalization
The process by which economies and societies have become integrated
Democracy
A system of government in which all members of society have a share in decision making
7th Amendment
Amendment to the US Constitution protecting the rights to a jury trial in civil cases
5th Amendment
Amendment to the US Constitution protecting against unsupported accusations of wrongdoing, self-incrimination, and double jeopardy (being charged for the same crime twice)
English Civil War
A conflict between Charles I and Parliament that resulted in the beheading of Charles I and the establishment of England as a Commonwealth. 1642-1651.
Anarchy
Absence of government authority and law, and absolute freedom of the individual
Thomas Hobbes
Political philosopher and author of Leviathan, advocate of absolute monarchy
Common Law
Laws created and developed through judicial decision
Constitutional Monarchy
Governmental system in which a country is ruled by a monarch who is limited in power by a constitution
Monarchy
Single person serves as head of state; often granted the position through heredity
Autocracy
Government ruled by one
Divine Right
Political doctrine that states that kings derive their power from God, not from their subjects; therefore kings are not subject to earthly authority. To question or rebel against their rule would be a sin.
10th Amendment
Amendment to the US Constitution which explicitly states that all powers not specifically given to the federal government belong to the states (reserved powers)
Justinian’s Code of Laws
Laws compiled in early 500 A.D. by Emperor Justinian of Rome
8th Amendment
Amendment to the US Constitution protecting against cruel and unusual punishment
Popular Sovereignty
The idea that all powers of government ultimately rest in the people
2nd Amendment
Amendment to the US Constitution which protects against restrictions of the right to bear arms
Inalienable Rights
Rights held by all individuals that are seen as natural to every person and outside the jurisdiction of the government
Social Contract
The idea that individuals covenant to create and follow a form of government
Aristocracy
Form of oligarchy in which the nobility have power and control
Natural Law
Laws universally recognized by the virtue of human reason or human nature
Republic
Form of democracy in which representatives make laws and run the government
Hammurabi’s Code
Early regulation of society with a basic outline that presumes innocence and follows “eye for an eye”
Magna Carta
First English document to establish the idea of limited government, or the belief that the king did not have absolute power. Signed in 1215.
Due Process Rights/Assurances
The legal obligation of the government to respect an individual’s legal rights, guaranteed by the 5th and 14th amendments
John Locke’s Two Treatises on Government
Outlined ideas of Social Contract Theory and natural rights that heavily influenced Thomas Jefferson and the Declaration of Independence
Natural Rights
The rights possessed by an individual with no requirement
Republicanism
A form of government in which representatives-usually elected-determine the laws
1st Amendment
Amendment to the US Constitution protecting against restrictions on freedom of speech, religion, press, petition, and assembly
Enlightenment
17th century intellectual movement centered on the belief that societies could improve through reason, science, and progress. Primarily led by philosophers: Locke, Rousseau, Voltaire, and Montesquieu.
Direct Democracy
A system of government in which all eligible citizens can vote on every issue
3rd Amendment
Amendment to the US Constitution which protects against the quartering of troops in homes
John Locke
Political philosopher who advocated the social contract theory and a limited monarchy. Encouraged people to rebel if their monarch didn’t protect their natural rights of life, liberty, and property.
Government
Institution to provide citizens with basic services
Oligarchy
A government ruled by a few powerful people
6th Amendment
Amendment to the US Constitution which protects the right to a fair, speedy and public trial, the right to a lawyer, the right to confront accusers, and the right to an impartial jury
Dictatorship
One person holds absolute power without constitutional limitations
English Bill of Rights
Secured the power of the Parliament over the monarchy and guaranteed the individual rights of the citizens (1688)
Glorious Revolution
A revolution against James II of England and his absolute rule; also called the Bloodless Revolution. Paved the way for the creation of the English Bill of Rights and a constitutional monarchy (1688).
Monarchy/Totalitarian/Fascism/Autocratic
A totalitarian state often restricts the existence and participation of opposition voices and exercises a high level of control over all aspects of society, both in the public sphere and in the private lives of citizens
9th Amendment
Amendment to the US Constitution which protects the rights of the individuals not specifically listed (enumerated rights)
4th Amendment
Amendment to the US Constitution which protects against unlawful searches and seizures
Bill of Rights
The first ten amendments to the Constitution which protected legal rights and civil rights of individuals. Created in 1791.
Law
A rule that a country or community recognizes to regulate the actions of its members. May be enforced by the imposition of penalties.
Absolute Monarchy
Rule by one person who has supreme authority and is not restricted by written law
Theocracy
A government run by religious officials who enforce religious principles
Social Contract Theory
According to Locke, an agreement between citizens and their ruler in which the ruler derives his power from his subjects
Representative Democracy/Democratic Republic
A system of government in which all eligible citizens vote to elect representatives to act on their behalf
Model Parliament
Britain’s first elected legislative body whose purpose was to tax the wealthy landowners and create laws, formed in 1295
Income Tax
A tax on an individual’s pay
Citizen
A legally recognized subject of a government, either native or naturalized. In the US, a citizen is required to obey the law, serve as a juror if called, and pay taxes. Citizens are also expected to be informed on issues and vote in elections, volunteer in their community, and serve in the military if they are interested.
Speaker of the House
The leader of the majority party of the House of Representatives, selected by the majority party members
Declaration of Independence
Document adopted by the Second Continental Congress on July 4, 1776. Signed by representatives from all 13 colonies. The document outlined the complaints the colonists had about Great Britain and officially declared the US free from British rule.
President Pro Tempore
The most senior member of the majority party who leads the Senate when the Vice President is absent
Naturalization
The process of becoming a citizens in a country when not already a native citizen
Proportional Representation
A model in which parties gain seats based on the proportion of the vote received
House of Burgesses
The first elected legislative body which became a model for other colonies governmental systems. Met in Jamestown, Virginia.
Marbury v. Madison
1801: Established Judicial Review, which allows the Supreme Court to rule a law unconstitutional and void the law
Super PACs
A result of the 2010 Citizens United Supreme Court case that ruled political contribution restrictions were an unconstitutional act against the freedom of speech, resulting in unlimited donations and unprecedented spending in political campaigns
The Media
Not an official part of the political system, but plays an important role in the political process. Reports on political events, legislation, and conducts investigation into government activities and government officials.
Brown v. Board of Education
1954: The Supreme Court ruled in this case that segregation of public schools was unconstitutional, overturning the finding in Plessy v. Ferguson.
Implied Powers
Powers not explicitly written in the Constitution that are allowed under the elastic clause
Constitution: Article 2
The Powers, Eligibility Requirements and Limitations of the Executive Branch
Judicial Review
The responsibility of the Supreme Court and the rest of the federal judiciary to determine if a law is constitutional
Checks and Balances
Each branch has the power to limit the power of the other two branches
Constitutional Convention
A meeting of at least two-thirds of the states to approve an amendment to the Constitution, which still requires three-fourths of the states to ratify the amendment
Capital Gains Tax
A tax on the profit gained by the sale of an asset, such as stocks, bonds, or property
Regressive Tax
A tax structure in which the higher share of the tax burden is placed on poorer individuals and less on wealthier individuals
Sale Tax
A tax on the purchase price of a good; usually levied by state and local agencies
Constitution: Article 6
Maintenance of Previous Debts, Supremacy of the Constitution, and Oaths of Office
Flat Tax
A tax structure in which consumers pay a fixed percentage of the value of the item being taxed
Property Tax
A tax on the value of a home or land that is paid to local governments by the owner of the real estate
Veto
Ability of the president to reject laws passed by Congress. Congress can overturn a veto with a 2/3 vote.
Electors
Members of the national electoral college who actually vote for the president
Bicameral
The split of the legislative branch into two houses, each with a different set-up and focus
Preamble
An introductory statement in a document that explains the document’s purpose and underlying philosophy
Proportional Tax
A tax structure in which the rate is fixed and the amount of tax paid is proportional to the income of the individual being taxed
Electoral College
The system for electing the President by using electors from each state based on the number of Congressional representatives the state has
Plessy v. Ferguson
1896: The Supreme Court ruled in this case that was racial segregation for public facilities was constitutional, as long as they were “separate but equal”
Lobbying
The practices of interest groups to influence elected officials, policy makers, and politics
Dred Scott Case
Case in which the Supreme Court ruled that Scott, a former slave, was not a citizen and had no right to sue in court
Great Compromise/Connecticut Compromise
An agreement between all states to use two different forms of representation for the two houses of Congress
House of Representatives
One house of Congress with proportional representation
Political Action Committees (PACs)
Committees that raise money to support specific candidates for political office who will presumably support their agendas
Supreme Court
The highest court in the land, established by the Constitution. Justices to the Supreme Court are appointed by the President, approved by the Senate, and serve for life or until retirement
Commerce Clause
A key clause of the Constitution. Regulates interstate commerce. This power has been used to justify the expansion of the legislature over nationwide issues, since they could impact interstate commerce
Federalism
The system of shared power between the national government and the state and local governments
Minority Leader
The leader of the minority party in the House of Representatives
Progressive Tax
A tax structure in which income brackets are used to determine the tax rate. As an individual’s income increases, their tax rate progresses from bracket to bracket.
Separation of Powers
Division of power into three branches of government to prevent corruption or concentration of power. Executive, judicial, legislative.
US Constitution
Document which lays the foundation for the US Government and provides a blueprint of democracy for the rest of the world
Articles of Confederation
1st Constitution of the U.S. 1781-1788 (Weaknesses-no executive, no judicial, no power to tax, no power to regulate trade)
