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BEC > Economic Concepts & Analysis > Flashcards

Economic Concepts & Analysis Flashcards

1
Q

What is economics?

A

Science that studies human behavior as the relationship between ends & scarce means that have alternative uses

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2
Q

What are business cycles?

A

Rise & fall of economic activity relative to long-term growth trends, fluctuations of economic activity

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3
Q

What is macroeconomics?

A

Study of economics as a whole

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4
Q

What is the GDP?

A

Total market value of all final goods & services produced within the borders of a nation in a particular period regardless of who owns the resources

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5
Q

What is an expansionary phase?

A

Rising economic activity & growth, rising above long-term growth trend, profits likely to be rising

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6
Q

What is a peak?

A

High point of economic activity, end of expansionary phase, beginning of contractionary phase, capacity constraints & input shortages, higher costs & price levels

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7
Q

What is a contractionary phase?

A

Falling economic activity & growth, follows a peak, profits are falling

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8
Q

What is a trough?

A

Low point of economic activity, lowest profit levels, excess production capacity, reducing workflows & cut costs

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9
Q

What is a recovery phase?

A

Follows a trough, economic activity increases, profits stabilize & demand for goods & services rises

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10
Q

What is a recession?

A

Two quarters of falling national output

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11
Q

What is a depression?

A

Severe recession with a long period of stagnation in business activity & high unemployment rates

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12
Q

What is a leading indictator?

A

Predicts economic activity

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13
Q

What is a lagging indicator?

A

Follows economic activity

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14
Q

What is a coincident indicator?

A

Change at same time as whole economy

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15
Q

What is perfect (pure) competition?

A

No firm can influence market price of its product nor shift market supply sufficiently

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16
Q

What is monopolistic competiton?

A

Many sellers compete to sell differentiated product in a market in which entry of new sellers is possible

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17
Q

What is an oligopoly?

A

Few sellers dominate sales of a product & entry of new sellers is difficult

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18
Q

What is a monopoly?

A

Concentration of supply in a single firm

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19
Q

What is fiscal policy?

A

Government’s use of government spending & taxation to influence economy

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20
Q

What is monetary policy?

A

Used by a national’s central bank (Federal Reserve) to affect money supply, interest rates, & credit available in the economy

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21
Q

What are open market operations?

A

Government buying & selling government securities

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22
Q

What is the discount rate?

A

Interest rate the Federal Reserve charges its members banks

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23
Q

What is the required reserve ratio?

A

How much money a bank is required to hold in its vault or on deposit with a Federal Reserve bank

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24
Q

What are regulations?

A

Rules established by a government that guide how an industry and its entities can operate

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25
Q

What are trade controls?

A

Restrict transactions & transfers of goods/services, protect domestic industries

26
Q

What are export controls?

A

Laws protecting trade & national security

27
Q

What are tariffs?

A

Taxes on imports which increases prices of foreign goods

28
Q

What are quotas?

A

Limits on quantity of a good that can be imported over time

29
Q

What are embargoes?

A

Prohibit importing or exporting of certain goods from a specific country

30
Q

What is microeconomics?

A

How human behavior affects conduct of narrowly defined units

31
Q

What is a market?

A

Collection of buyers & sellers meeting or communicating in order to trade goods or services

32
Q

What is the demand curve?

A

Illustrates maximum quantity of good that consumers are willing & able to purchase at every price

33
Q

What is the quantity demanded?

A

Quantity individuals are willing to purchase at every price

34
Q

What is a change in quantity demanded?

A

Movement along the demand curve, change in amount of good demanded resulting from change in price

35
Q

What is a change in demand?

A

Movement of the demand curve, change in amount of good demanded resulting from change in something other than price

36
Q

What is the fundamental law of demand?

A

Price of a product & quantity demanded are inversely related

37
Q

What is the substitution effect?

A

Consumers purchase more (less) of a good when its price falls (rises) in relation to other good’s prices

38
Q

What is the income effect?

A

As prices are lowered with income remaining constant, people purchase more or all of lower-priced products

39
Q

WRITEN - factors shifting demand curves

A

Changes in wealth
Changes in price of related goods
Changes in consumer income
Changes in consumer tastes or preferences for a product
Changes in consumer expectations
Change in number of buyers

40
Q

What is the supply curve?

A

Maximum quantity of a good that sellers are willing & able to produce at every price

41
Q

What is quantity supplied?

A

Amount of good producers are willing & able to produce at every price

42
Q

What are changes in quantity supplied?

A

Movement along the supply curve, change in amount producers are willing & able to produce from change in price

43
Q

What is a change in supply?

A

Movement of the supply curve, resulting from change in something other than price of good

44
Q

ECOST - factors shifting supply curves

A

Changes in price expectations of supplying firm
Changes in production costs
Changes in price or demand for other goods
Changes in subsidies or taxes
Changes in production technology

45
Q

What is market equilibrium?

A

When there are no forces acting to change the current price/quantity combination, where supply & demand curves intersect

46
Q

What is a price ceiling?

A

Maximum price established below equilibrium which causes shortages, prices are low & greater demand than supply available

47
Q

What is a price floor?

A

Minimum price set above equilibrium which causes surpluses, minimum prices established by law

48
Q

What is elasticity?

A

How sensitive the demand for or supply of a product is to a change in price

49
Q

Price elasticity of demand

A

% change in quantity demanded / % change in price

50
Q

What is price inelasticity?

A

Price of demand is less than 1.0

51
Q

What is unit elastic?

A

Price elasticity equal to 1.0

52
Q

Price elasticity of supply

A

% change in quantity supplied / % change in price

53
Q

What is price elasticity?

A

Absolute price is greater than 1.0

54
Q

Cross elasticity of demand (supply)

A

% change in number of units X demanded (supplied) / % change in price of Y

55
Q

What is cross elasticity?

A

When quantity demanded for or supplied of one good causes the price change of another good

56
Q

What does a positive coefficient in cross elasticity mean?

A

Substitute goods

57
Q

What does a negative coefficient in cross elasticity mean?

A

Complementary goods

58
Q

What does a zero coefficient in cross elasticity mean?

A

Goods are unrelated

59
Q

Income elasticity of demand

A

% change in number of units of X demanded (supplied) / % change in income

60
Q

What does positive income elasticity mean?

A

Normal good, product whose demand is positively related to income

61
Q

What does negative income elasticity mean?

A

Inferior good, product whose demand is inversely related to income

62
Q

What is inflation?

A

Sustained increase in general prices of goods & services

BEC (4 decks)

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