Econ Test 1 Flashcards
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Who is the Father of Economics and wrote “The Wealth of Nations”?
Adam Smith
The nations of Europe followed the economic policies of mercantilism during the ____________ century.
17th
An economic ________ seeks to show the relationships among the various components of an economy.
Model
The _________ of a good refers to the quantity of a good for sale at a certain price under certain conditions.
Supply
Lumber is an example of a _________ good.
Scarce
When economists use the term _________ they are referring to material items or services that are valuable to people.
Goods
Laissez-faire, a French phrase often used in connection with economics, means _____________?
Let things alone
A forklift used to transport imported goods within a warehouse would be a ________ good.
Capital
A Communist-controlled country would most likely have a _____________ economy.
Command
The capitalism of the former Soviet Union was _________ capitalism because the government controlled most of the capital.
State
This gentleman used his resources wisely to make gunpowder for President Jefferson.
E. I. du Pont
The prosperity and efficiency of the free market economy is owed to its foundation of limited government, freedom of enterprise and competition, and ___________?
Property of Rights
If a grocery store owner were to talk about the amount of bananas consumers were buying, he would be referring to that fruit’s __________?
Demand
When a country finds ways to produce more goods from existing resources, the prosperity of the national economy _______.
Increases
After trying what was called the “common course and condition”, the __________ abandoned this economic system.
Pilgrims
According to economists, the factors of production are ________ even in the most prosperous countries
Scarce
All people are said to be _________, or people who use goods.
Consumers
Adam Smith stressed the importance of separating complex jobs into individualized tasks, an idea known as _______________.
Division of Labor
Finding new resources to satisfy existing wants is one way to ___________ an economy’s prosperity.
Increase
Some people believe that ___________ should be listed along with the traditional factors of production.
Information
Work done by people in a free society is usually _________ productive than that done by people in a command economy.
More
The study of national economics.
Macroeconomics
The study of specific components within a major economy.
Microeconomics
An intangible good for which people expect to pay.
Service
Mechanism through which people exchange goods.
Market
Economic system which advocates the gathering of gold.
Mercantilism
The establishment of colonies to benefit a mother country.
Imperialism
Directed by customs and habits.
Traditional Economy
Governed by an “invisible hand.”
Free Market Economy
Directed by the government.
Command Economy
Provides barely enough to keep a society alive.
Subsistence Economy
The _____________ were a French group of 18th-century economists who believed the market should be guided by “the rule of nature.”
Physiocrats
Economics is the study of the choices that individuals and societies make concerning the production, ____________, and consumption of goods.
Distribution
__________ was the founder of the Austrian School of Economics.
Karl Menger
The value associated with any good is directly related to it _____________ and ____________.
Scarcity and Utility
What are the four factors of production.
Natural resources, labor, capital, and entrepreneurship.
A society in which each child is expected to grow up to become whatever his parents were would have a _____________ economy
Traditional
As seen in a circular flow model, private households and private ___________ make the majority of decisions in a free market economy.
Businesses
Explain how the free market principles found in Adam Smith’s work have helped to shape American history.
The founding fathers applied his principles for a free market, division of labor, and establishing a foundation of freedom for the new country
Why did the Pilgrims’ original economic plan fail? What did they change and why did this change help them succeed?
The pilgrims were unable to work together with others in the common course and condition system. This failure led to changes in which each family was in charge of their separate holdings. The pilgrims then had pride in what they were building for their families and not for the community as a whole.
The study of the choices that individuals and societies make in the production, distribution, and consumption of goods.
Economics
Any system for the production, distribution, and consumption of goods and services.
Economy
Scholars of the production, distribution, and consumption of goods.
Economists
A prediction, based upon past observations and current trends, of what will happen in an economy in the future.
Economist Forecast
A theory that seeks to show the relationships among the various components of an economy.
Economic Models
The human desire to have and use a certain good.
Want
Intangible goods produced by labor for which people expect to pay.
Services
A very large number of people to whom very large quantities of products are sold.
Mass Market
People who use goods.
Consumers
People who work to provide goods.
Producers
A limited supply of a good.
Scarcity
A necessity-something that would be difficult to live without.
Need
The industrial skills and scientific methods that make possible efficient production.
Technology
The general rules or principles guiding the production, distribution, and consumption of goods.
Laws of Economics
Things produced for direct use by consumers.
Consumer Goods
Anything used in the production and distribution of goods and services.
Capital good, Investment Good, Capital.
The economic riddle that asks why rareties, such as diamonds, normally command high prices while necessities, such as water, usually command low prices.
Diamond-Water Paradox
Usefulness
Utility
The difference in value of the goods that a country sells abroad compared to those it purchases from other countries.
Trade Balance
Taxes that governments apply only to imported goods.
Tariffs
The theories developed by economists of the 19th and early 20th centuries that stated that the free market was the best possible economic system.
Classical Economics
The division of tasks among workers allow the production of goods by people doing the jobs they do best.
Specialization
Economics success, or the condition of enjoying many goods, including services.
Prosperity
The value of all the things that people own.
Wealth
According to Adam Smith, this brings producers and consumers together when they pursue their personal interests.
Invisible Hand
What are the Factors of Production?
Natural Resources, Labor, Capital, Entrepreneurship, and Information.
A system in which decisions involving the production, distribution, and consumption of goods are based upon custom, heredity, and caste.
Traditional Economy
Systems in which people are free to make their own economic choices.
Free Enterprise Economy, Private Capitalism, Market Economy.
A system that combines a good measure of free enterprise in some areas with heavy state regulation in others.
Mixed Economy
Includes land and other raw materials.
Natural Resources
Any work, whether physical or mental, that contributes to the production of goods and services.
Labor
The intelligent direction and supervision of natural and human economics resources.
Entrepreneurship, Management
A person in effective control of starting or running a business or industrial undertaking.
Entrepreneurship
What are capitalisms basic components?
Property Rights, Freedom of Enterprise and Competition in a Market Environment, and Limited Government.
A simplified diagram that illustrates how resources and products move through the market.
Circular Flow Model
