econ quiz 1 Flashcards
GDP
Gross Domestic Product
NDP
Net Domestic Product
PI
Personal Income
DI
Disposable Income
Economics
A social science concerned with making optimal choices under conditions of scarcity.
What intensifies scarcity?
- Unlimited human wants
- Inefficient use of resources
- Misallocation of resources
Microeconomics
The study of the individual consumer, firm, or market.
Macroeconomics
The study of the entire economy or a major aggregate of the economy.
4 sectors:
household, government, business, foreign
Free market economy
- Individual Capitalism
- U.S., Hong Kong, U.K.
- Resources privately owned
- They choose what they want to do with the resources
- Individual
State directed free market economy
- Communion capitalism
- Japan, Germany, South Korea
- Think of community first
Social command
- Communism
- U.S.S.R
- Incentive to work is low
- No market
Mixed Economy
- France, Sweden, Canada
- Gov. controls all resources (electricity, gas)
- Can own properties, businesses
Economic Goals
- Economic Growth
- Economic Security
- Full employment
- Economic Freedom
- More equitable distribution of income
- Price stability
The five fundamental questions:
- What goods and services will be produced?
- How will the goods and services be produced?
- Who will get the goods and services?
- How will the system accomodate change?
- How will the system promote progress?
Private property
Personal benefits, creates jobs, profit generating, owning resources.
Freedom of enterprise
Free to enter any business.
Freedom of choice
Choosing what you want.
Self Interest
What benefits me
Competition
Encourages more firms to enter markets.
