Economic Institution

Question 1

What is an economic institution?

Answer 1

It deals with money or with managing distribution of money, goods, and services

ex. banks

Question 2

What are non-market institutions?

Answer 2

Does not entail the exchange of cash for the rendering of service or provision of goods.

Ex. church, universities, organizations, charity (donations)

Question 3

What is reprocity?

Answer 3

• In sociology, it is the system of volunatry exchange among individuals
• In economics, it is the exchange of equal advantages

Question 4

What is generalized reciprocity?

Answer 4

It is giving something without anticipation of instant return

Ex. giving a birthday gift to someone(?)

Question 5

What is balanced reciprocity?

Answer 5

It is giving out something with the anticipation of immediate return

Ex. work (service = salary)

Question 6

What is negative reciprocity?

Answer 6

It is when the exchange of something involves taking advantage of someone or the situation.

Question 7

What is transfer?

Answer 7

• Payments where there is no value added to the economy
• Ex. transfer of money from private hands to the gov’t (no additional production of goods & services)

Question 8

What is redistribution?

Answer 8

• It is the combination of the features of transfer and reciprocity
• The pooling of goods and redistributing the goods among same members

ex. cooperatives

Question 9

What is a market institution?

Answer 9

• Any insitiution that operates/provides market infrastructure for trading, registering, or clearing of

ex. coffee shop

Question 10

What is market system?

Answer 10

It allows for the free flow of goods between and among private individuals and firms with very limited participation from the gov’t

Question 11

What is the invisible hand?

Answer 11

It is a metaphor for the unseen forces that move the free market economy

ex. when there are a lot of apple suppliers in an economy

Question 12

What is specialization?

Answer 12

It is the narrowing of the production of goods to only a few different items

the strength of a firm

Question 13

What are market transactions?

Answer 13

It involves parties who sell their goods and services in exchange for cash from consumers

Question 14

What is market economy?

Answer 14

It is the economic system in which individuals, rather than the state, own most of the resources

Individuals control the use and price of these resources

Question 15

What is free market economy?

Answer 15

It is controlled by the market forces of supply and demand, as opposed to one regulated by gov’t controls

Question 16

What are state market relationships?

Answer 16

When a state plays an important role in the market

LGUs, business permits, paying taxes

Question 17

What is monetary policy?

Answer 17

It is the reduction in interest rates to encourage investors to borrow money and invest in businesses to spur production

Question 18

What is fiscal policy?

Answer 18

It is the use of taxation and gov’t spending to influence the level of income/aggregate input

used by gov’t revenue collection to influence the economy