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History > Econ Final > Flashcards

Econ Final Flashcards

1
Q

Insurance to help the poor

A

Medicaid

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2
Q

Legal way for a person to walk away from paying some or all of their bills

A

Bankruptcy

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3
Q

Option given up in order to get something else

A

Opportunity Cost

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4
Q

Person who creates a business from scratch

A

Entrepreneur

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5
Q

Insurance to help the elderly

A

Medicare

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6
Q

What does a Form W-4 tell the employer

A

How much to withhold from your pay each pay period; this form can change how much net pay one gets and change the amount of deductions in one’s pay

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7
Q

A Form W-2 tells

A

How much income you have made over the entire year

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8
Q

The purpose of a Form W-2 is used to

A

To file your income taxes

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9
Q

Who do you pay federal income tax to?

A

IRS

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10
Q

T/F Taxes are the lowest payroll deduction

A

True

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11
Q

T/F Gross income can be found by hours worked times wages per hour minus payroll deductions

A

False, hourly rate of pay times wages per hour (gross income is calculated without payroll deductions)

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12
Q

What is the difference in net and gross pay

A

Gross: amount of money you make before payroll deductions,

Net: amount of “take home” money after payroll deductions

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13
Q

2 ways a person makes their money “work” for them

A

Savings, Investing

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14
Q

What does a credit report show about a person’s finances?

A

What loans they currently have, previous loans, accepted/denied and paid/unpaid loans. How responsible they are with paying loans.

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15
Q

How a person can increase their auto insurance

How a person can decrease auto insurance

A

Increase: Gender-Men have more accidents, single people have higher rates bc they have more accidents
Decrease: Drive safely, drive a safer car, be a woman, be married

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16
Q

T/F A person who buys insurance is agreeing to no loss for protection in case of a problem

A

False; a person who buys insurance is agreeing to a small loss for protection in case of a problem

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17
Q

T/F The shorter a person’s loan term, the less the person pays at the end

A

True

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18
Q

T/F When buying insurance, an insurance company transfers risk and responsibility from the individual to the company

A

True

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19
Q

T/F A person can increase their premium by increasing their deductible

A

False, a person can decrease their premium by increasing their deductible

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20
Q

T/F One with higher coverage (insurance) will have a relatively more expensive premium

A

True

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21
Q

Earning interest on interest

A

Compounding

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22
Q

hen someone is willing to loan you money

A

Credit

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23
Q

Amount of money a person actually borrows and must pay back

A

Principle

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24
Q

Amount a person must pay to transfer risk to an insurance company

A

Premium

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25
Q

Amount a person pays out of pocket before insurance

A

Deductible

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26
Q

Savings vs. Investment

A

Savings: short term, low risk, low return, high liquidity, guaranteed
Investments: long term, high risk, high return, low liquidity, no guarantee
Both are ways to make money work for you

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27
Q

Why should a person use diversification when investing

A

So not all their money is in one place. (ex. stock market crashing)

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28
Q

15 vs. 30 year mortgages

A

Always choose the shorter mortgage if its affordable because they will pay less in the end because they’ll have less interest

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29
Q

Why is a line graph better than a tabular model

A

It is more detailed and shows data over a period of time

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30
Q

4 factors of production

A

Land, labor, capital, entrepreneurship

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31
Q

4 factor costs

A

wages, rent, interest, profit

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32
Q

What does a PPC (Production Possibilities Curve) help someone determine

A

How much of one good/service must be given up to obtain more of another, what amount of production is efficient

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33
Q

What does a Circular Flow Model show

A

How an entire nation’s economy flows, the relationship between the financial market, government household, and business firms

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34
Q

Be able to use a PPC

A

**

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35
Q

Circular Flow Model info

A

*Review test Ch.2

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36
Q

T/F Free market system works best when it is interfered with a lot

A

False, it works best when it has little to no interference

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37
Q

T/F A surplus can be solved or reduced by increasing demand, dercreasing supply, or allowing price to fall to market equilibrium

A

True

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38
Q

3 possible solutions to a shortage

A

Decreasing demand, increasing supply, allowing price to rise to market equilibrium

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39
Q

Principle Diminishing Marginal Utility

A

(ex. man on island with bag of beans) the more you get, the less useful it is

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40
Q

Things that can cause a change in demand

A

Change in price of related goods, consumer taste, consumer income

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41
Q

Things that cause change in supply

A

Change in technology, price of related goods, price of production materials

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42
Q

Change in quantity demanded of quantity supplied results from the change in _____ of a good/service

A

Price

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43
Q

Law of demand

A

The more expensive something is, the less quantity demanded there is for it. As the price lowers, quantity demanded goes up.

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44
Q

**use a demand schedule and create a curve that follows it

A

Quantity on x, Price on y

As quantity goes up, price goes down

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45
Q

**Use supply schedule

A

Q on x, P on y

As quantity goes up, price goes up

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46
Q

Law of supply

A

The higher the price buyers re willing to pay, the greater the quantity of the product a supplier will produce and vice versa

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47
Q

Demand and supply curves and market equilibrium

A

Supply goes from bottom left to top right, demand goes from top left to bottom right, the market equil. is the point where the two meet-where the market is happy

48
Q

On a curve, what does an increase in supply look like

A

Entire supply curve moves to the right

49
Q

On a curve, what does a decrease in demand look like

A

Entire demand curve moves left

50
Q

If a substitute good increased in price does that change quantity demanded or demand of what it replaced?

A

Demand of what it replaced

51
Q

T/F Market interest rates regulate the flow of money from business households through the financial market and can encourage or discourage saving/spending

A

T

52
Q

T/F A command economy is likely to raise taxes to redistribute wealth

A

True

53
Q

A business can produce more because they use what they already have in a more efficient manner

A

Intensive

54
Q

When prices rise, value of money decreases

A

Inflation

55
Q

Businesses can produce more because they gained factors of production

A

Extensive

56
Q

**Look over attributes of command vs. market economy

A

*Ch. 5

57
Q

3 major economic questions

A

Input-How
Output-What
Distribution-Who

58
Q

Father of laissez faire economics

A

Adam Smith, wrote The Wealth of Nations, believed in the invisible hand guiding the market, money is a means to an end not an end itself and that a nation is truly wealthy if its people are wealthy

59
Q

2 arguements for who should control factors of production

A
  1. Individuals own and make decisions

2. Government owns and make decisions

60
Q

Governments selling nationalized businesses back to private owners

A

Privatization

61
Q

Nation under extreme state capitalism in which high taxes are used to provide social programs

A

Welfare state

62
Q

Governments acquiring of major industries

A

Nationalization

63
Q

In Capitalism, who makes the decisions? Socialism?

A

C: people
S: government

64
Q

Share of portions of ownership in a corporation

A

Stock

65
Q

Distribution of a portion of a corporations profits

A

Dividends

66
Q

Original sale of a company’s stock through investment bank

A

Initial Public Offering

67
Q

Group of stocks hat analysts use to help ID stock trends in specific industries

A

Stock Index

68
Q

Collection of stocks from different individual corporations

A

Stock portfolio

69
Q

Privately managed stock portfolios

A

Mutual funds

70
Q

Location where stock is traded

A

Stock exhanges

71
Q

Why are stock markets important to the economy

A

1) they show if the economy is balanced

2) they show if the government should save more or spend more

72
Q

Why was the SEC founded?

A

To ensure correct information about companies worth and business dealings and provide that information to the public. Could have prevented Great Depression bc speculative bubble wouldn’t have formed

73
Q

How does one make money on the stock market

A

Buy low, sell high

74
Q

Made of material worth less than the item is worth

A

Token Coin

75
Q

Percentage of deposits that must be kept on hand by American banks

A

Reserve requirement

76
Q

Money supply is increased to combat things like recession and unemployment

A

Loose monetary policy

77
Q

Money supply decreased to lower inflation

A

Tight Monetary policy

78
Q

Payment all creditors must accept

A

Legal tender

79
Q

Money not backed by something like gold

A

Fiat money

80
Q

Increase o decreasing of money supply to influence economy

A

Monetary Policy

81
Q

Buys and sells governmental securities, 12 members

A

FOMC

82
Q

“The Fed” oversees issuing of currency and regulates bank activity and provides bank services

A

Federal Reserve System

83
Q

Expansion of money supply as result of commercial banks lending their deposits to others

A

Money multiplier effect

84
Q

Regulatory agency that deals with state banks not part of the Federal Reserve System

A

FDIC (Fed. Deposit Ins. Corp.)

85
Q

Tool the Fed uses to create money that deals with lending money to banks is changing the

A

Discount Rate

86
Q

2 checks for the Federal Reserve to keep it from acting irresponsibly

A
  1. Congress can dismiss and elect people to Board of Governors
  2. Congress is the only reason the Federal Reserve exists
87
Q

How does money multiplier work

A

Deposit x 1/reserve requirement = money produced

Deposit=1000, rr= 10%

1000 x 1/.10 = 10,000 the bank will keep 100 of her deposit and loan out 900, cycle continues

88
Q

What depatment mints and prints coins and paper money

A

US Department of the Treasury

89
Q

What federal bureau prints cash

A

Bureau of engraving and printing

90
Q

What federal agency creates coins

A

US Mint

91
Q

Nation’s wealth per persn

A

per-capita GDP

92
Q

Importing more than exporting

A

Trade deficit

93
Q

Exporting more than importing

A

Trade surplus

94
Q

Real GDP is better than nominal when comparing nations wealth

A

*

95
Q

What is included in the GDP

A

things produced in the past year, new items only, only things produced domestically

96
Q

4 phases of business cycle

A

Trough, expansion, peak, recession

97
Q

Trough

A

Can become depression, Depressed national income, highest unemployment rate

98
Q

Expansion

A

Unemployment rate falls, national GDP rises, income expands

99
Q

Peak

A

highest wages, lowest unemployment rate,

100
Q

Recession

A

decrease in purchases, workers are laid off, decreasing production

101
Q

Unemployment occurring at a time of the year

A

Seasonal

102
Q

unemployment when a person is between jobs

A

Frictional

103
Q

Unemployment when a workers skills dont match available jobs

A

Structural

104
Q

Unemployment linked to downs of business cycle

A

Cyclical

105
Q

Group of figures measuring changes in prices that household consumers pay for purchases

A

Consumer Price Index

106
Q

Amends payments upward as inflation causes prices to rise

A

Cost of living Adjustment

107
Q

2 fixes for inflation

A

Limiting Money Creation-strikes root cause of inflation(expansion of money supply)
Wage-Price Controls

108
Q

Ch. 14 graphs

A

Cost-Push Inflation: supply increases which causes higher demand of items because demanded and higher wages
Demand-Pull: Demand increases and causes decrease in supply
Price on y, GDP on x

109
Q

The less you make the higher you’re taxed

A

Regressive Tax

110
Q

Legislation requiring deduction o social security taxes from worker’s paycheck

A

Fed. Insurance Contribution Act

111
Q

The more you make, the higher you’re taxed

A

Proportional Tax

112
Q

To cause expansion and peak to not be so extreme, the government _____ spending and increases taxes

A

decreases (opposite for a recession)

113
Q

How does governmental borrowing destroy future productivity

A

If the government continues to borrow, it will lower and destroy future productivity. It causes the nation to go more into debt and have to pay back with interest which cancels future profit.

114
Q

How does taxation cause confusion in the marketplace?

A

It gives the economy a false sense of ho much money it actually has

115
Q

How does proportional taxation specifically affect national work ethic?

A

It makes those who earn more not want to make as much money because they will be taxed more for making more

History (4 decks)

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