Competency 14 Flashcards

1
Q

What are economics?

A

Study of how a society allocates its scare resources to satisfy competing wants

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2
Q

What is the study of how a society allocates its scarce resources to satisfy unlimited and competing wants?

A

Economics

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3
Q

A fundamental fact of Economics is resources are ________ and wants are _________?

A

scarce and infinite

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4
Q

In order to satisfy the wants with the scarce resources choice have to be made. If society uses resources to produce one good, it won’t have enough of those resources to produced another good. More of the first good means less of the other good. This trade off is known as _______?

A

Opportunity Costs or Value of the sacrificed alternative

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5
Q

What 3 questions are answered by the economic systems that society uses?

A

What goods to produce?

How will they be produced?

How will the goods be distributed?

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6
Q

What is Supply & Demand?

A

Demand is the consumer preferences and referrs to the quantities of a good that buyers will buy

Supply is based on the cost of producing these goods and referrs to the quantities that sellers are willing and able to sell

The market equilibritum price is determined where the decision of the buyers and sellers coincide

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7
Q

What is the difference between Micro and Macro Economics?

A

Micro economics studies the behavior and decision making of individual economic units (firms, consumers- wegmans, school)

Macro Economics is the study of national economy or the aggregate units that comprise the economy (national economy)

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8
Q

There are 4 kinds of market structures in the output market, What are they?

A

Perfect competition: milk bought from dairy farms and government sets the price

Monopoly: one seller who can control price (no competition, verizon takes over all internet and phone in country) illegal

Monopolistic Competition: all have same items, but different prices and different appearances (Shopping Centers)

Oligopoly: few sellers of products that might be the same or different (automobiles or airlines)

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9
Q

What is Gross Domestic Product (GDP)?

A

GDP = C+I+G+(X-M)

How much did CONSUMERS spend + INVESTMENT expenses + spending of 3 levels of GOVERNMENT + (how much was SENT OUT - ??)

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10
Q

What are Lasissez-Faire Economics?

A

pure Capitalism, free markets without Government interfernece in the marketplace

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11
Q

Who are 3 famous economists and what are their theories?

A

Adam Smith: wrote Wealth of Nations. Believed in Lasissez-fare economics even though they result in uneual distribution of income

Parson Malthus: theories are referred to as the dismal science (sad) population growth would exceed food growth. Lower classes will have increasing poverty

David Ricardo: Developed the theory of Rent and theory of Comparitive Advantage. Rent: based on the fact that land is fixed in supply (can’t get more land than there is). Comparitve Advantage: We make the wheat, China makes the rice, Japan makes the cars then trade with each other. Use all your resources for one thing rather than multiple things

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12
Q

What are demand side economics?

A

Traditional macro economic’s. Explains the levels of output of goods, income, and employment in terms of the level of spending in the economy.

Recession is when not enough spending going on, not enough demand to cause people to be employed, unemployment goes up, government has to stimulate the economy to stimulate economy

Inflation happens when there is more demand than supply. Full employment, nobody else to call on to make the goods. Government has to slow down the economy

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13
Q

What are Supply Side Economics?

A

1980’s to address stagflation. This is when the economy had rising inflation and unemployment at the same time and the demand side model could not solve it. The Raegan administration had to give tax incentives to induce people to work and improve the quality of the labor force, etc.

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14
Q

When nations engage in trade the items have to be paid for. This involves ____ ______ and _____ _____ _____.

A

Exchange rate and international currency markets

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15
Q

What is the Bretton Woods system?

A

US dollar was quoted in terms of Gold. All other currencies were quoted in terms of the dollar. Ended in 1973 and since then currencies have been floating which means they adjust to trade inbalances with their values going up or down automatically without intervention.

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16
Q

Consumers can also be called?

A

A Market

17
Q

What is a commodity?

A

Goods that are sold and bought

18
Q

What is the difference between Laissez-fare and Free Enterprise?

A

Laissez-fare is the idea that an invisible hand will guide the free enterprise system to maximize potential efficiency.

Free Enterprise is Capitalism and promotes private ownership of land, capitol, and businesses with minimal government interference.

19
Q

Who is the father of mdoern economics?

A

Adam Smith

20
Q

Who proposed for more equal division of profits among employers and workers?

A

John Stewart Mill

21
Q

What is a method of trade restriction used by some countries?

A

Import quotos: countries will restrict the amount of goods imported in order to protect its domestic industries (ex. US will regulate how many foreign cars will come in that we can still sell American cars)