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FTCE 6-12 social Science > Economics > Flashcards

Economics Flashcards

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1
Q

Who is Adam Smith?

A

Founder of the field of economics.
1723-1790
Scottish
“Wealth of Nations” (1776) - Market Economy

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2
Q

Smith’s Views on Market Economy

A

Superior form of organization.

-Self-interest = dominant motivating force but self-interest = public interest

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3
Q

4 General viewpoints on workings of markets

A
  • classical
  • Keynesian
  • Monetary
  • Neoclassical
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4
Q

Definition of Economics

A

“The social science that examines how people choose to use limited or scarce resources to obtain maximum satisfaction of unlimited wants.”

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5
Q

Macroeconomics

A

Study of Economy as a whole

 - Inflation
 - Unemployment
 - Economic Growth
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6
Q

Microeconomics

A

Study of individual parts that make up the economy
-Households
-Business firms
-Government agencies
Emphasizes how units make decisions and consequences of decisions

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7
Q

Scarcity

A

1) Which & how many goods and services a society should produce.
2) How it should produce those goods and services
3) How goods and services should be distributed.

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8
Q

2 Components of Scarcity

A

1) Good has to be limited

2) People have to want it.

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9
Q

Economic Growth in relation to scarcity

A

Produce more of the goods and services people want so they have an abundant supply.

More Resources, Better Resources, Better Technology

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10
Q

Improve the Use of Goods and Services

A

Society uses resources wisely = less scarcity

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11
Q

Reduce Wants

A

Society wants less .

Difficult long term.

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12
Q

4 E’s

A

1) Allocative Efficiency
2) Productive Efficiency
3) Full Employment
4) Equity

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13
Q

Allocative (Economic) Economy

A

Produces the types and quantities of goods and services that most satisfy people.

Limited resources + right mix of goods and services = Allocative Economy

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14
Q

Productive Economy

A

“Technical Efficiency”
Producing greatest quantity of goods and services possible at minimum cost. Not wasting resources.

 - Not using more resources than necessary
 - Using resources where they are best suited.
 - Using technology to minimize cost
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15
Q

Equity

A

Wants Distribution of goods and services to be “fair”.

Equity =/= Equality

NO OBJECTIVE STANDARD

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16
Q

Standards of Equity

A

1) Contributory Standard
2) Needs Standard
3) Equality Standard

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17
Q

Contributory Standard

A

People are entitled to a share based on what the contribute.

More In = More Out

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18
Q

Needs Standard

A

Disbursed based on need.

Personal contribution is irrelevant

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19
Q

Equality Standard

A

Every Person is entitled to an equal share

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20
Q

Full Employment

A

Using all available resources (not just labor)

Produces more.

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21
Q

Production Possibilities Frontier Curve

A

Used to illustrate the problems associated with scarcity
-Maximum feasible combinations of 2 goods and services that society can produce

Assumptions: capable of only 2 goods
Fixed quantity of resources
Most productive manner.

22
Q

Technical Efficiency

A

When more of one good cannot be produced without producing less of the other.

23
Q

Traditional Economies

A
  • Rely on tradition to determine production/distribution
  • Not static
  • Reticent to change and ill-equipped for sustained growth
  • Poorer third world countries
24
Q

Command Economies

A

-Rely on central authority (dictator or government) to make decisions

25
Q

Market Economy

A
  • No central authority
  • Custom plays very little part
  • Buyers and sellers decide what goods and services.
  • Consumers make decisions based on income (Individual Self Interest)
26
Q

Mixed Economy

A
  • Contains elements of all 3 systems
  • All real-world economies are mixed economies.
  • Mixture varies by country
27
Q

Capitalism

A

Productive resources are owned by private individuals

28
Q

Socialism

A
  • Mixed economic system
  • Productive resources owned collectively by society
  • Allocation by government
  • Markets are used to determine price of goods and wages
29
Q

Planned Economy

A
  • Production is publicly owned with little to no private ownership.
  • Central planning authority makes decisions
30
Q

Demand

A

How much someone wants something

31
Q

Supply

A

How much of something is available

32
Q

Demand relation

A

Graph to show quantity demanded at a particular price.

  - Price on y-axis
  - quantity on x-axis - Downward slope = Buy less when price is high and more when price is low. - Upward slope = The more purchased the higher the price.
33
Q

Equilibrium

A

Intersection of the supply and demand curves.

“STABLE”

34
Q

Elasticity

A

Excess demand and excess supply that puts pressure on the prices.

35
Q

Elastic

A

When quantity produced responds to changes in price.

36
Q

Inelastic

A

When changes don’t respond to changes.

37
Q

Gross Domestic Product (GDP)

A

The total money value of final goods and services that a country produces over a given period of time (usually 1 year).

  • Snapshot of the economy at that certain point in time.
  • Used to measure country’s income
38
Q

Expenditures Approach

A

Looks at amount of new goods and services purchased in a country for a given year.

39
Q

Expenditure Approach Equation

A

GDP = C + I + G +NX

C: Consumption
I: Investment
G: Goods
NX: Net Exports

40
Q

Aggregate Supply

A

National output produced

41
Q

Aggregate Demand

A

National output purchased

42
Q

4 Phases of the Economic Cycle

A

1) Boom
2) Recession
3) Trough
4) Recovery

43
Q

Boom

A

Expansion of the economy that brings prosperity

44
Q

Recession

A

Contraction of the economy with a decline in GDP and rise in unemployment

45
Q

Trough

A

Turning point in the economic cycle.

Slide from the mean to the lowest point in a recession

46
Q

Recovery

A

Rise from the trough back to mean, lessening unemployment and rising prices

47
Q

Surplus

A

When sellers make too many goods and there isn’t enough buyers

48
Q

Inflation Rate

A

Rate at which prices rise

49
Q

Expansionary Fiscal Policy

A

Raises government spending and/or decreases taxes in order to increase spending.

50
Q

Contractionary Fiscal Policy

A

Decreases in government spending and increases in taxes to decrease spending in the economy.

51
Q

Federal Reserve System (The Fed)

A

Government entity in charge of banks and money

FTCE 6-12 social Science (3 decks)

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