Economics Test #1 Flashcards
What is GDP?
gross domestic product
What is GNP?
gross national product
What’s the difference between GDP and GNP?
GDP total monetary value of all finished goods and services produced within a country’s borders. GNP is total monetary value of all finished goods and services produced by a country
What are natural resources?
Raw materials used to produce goods
What natural resources did the US have when they were discovering new west?
Wood, coal, iron, copper, oil
Why did we need human resources?
Increased population following the Civil war provided a large workforce. Also, larger population also created a greater demand for products.
refrigeration
allowed food to be kept fresh and transported farther
automatic loom
allowed for more cloth to be produced faster.
Standardized sizes
allowed for the clothing and shoe industry to grow-more availability and cheaper
Transatlantic cable
communicate via telegraph with Europe
Laissez-faire
idea that the government should take a hands off approach regarding the economy
Why do we have free enterprise?
Economic growth at a rapid rate was possible because of little to no Government Interference
What was the hope for free enterprise?
the government was there for protection of property and to maintain peace and limited taxes and that the people control the economic growth of the country through individual decisions
Entrepreneur
Someone who organizes, manages, and assumes the risk of a business
Tariffs
A tax on imported goods.
High Tariffs
make foreign goods more expensive, used to slow trade
Low Tariffs
Used to encourage trade
Morrill Tariff
Increased tariffs on imported goods
Appealed to industrialists
What is a corporation?
a company with a group of owners. These people are called share holders
Privately held-shares
held (owned) by a small group who probably know each other
Publicly held-shares
held (owned) by thousands of people who trade on a stock exchange
What are Advantages/Disadvantages of buying into a public company?
Advantage-because you can buy small shares for less money and you aren’t personally responsible for any issues with the company, such as a lawsuit.
Disadvantage-You can be liable if you are a major percentage owner of the company
Investing in a corporation
When someone buys a share of a company they become an owner.
Ownership is determined by the percent of shares a person owns.
What happens when you share/invest in a company?
you share in both the profit and loss
Supply
the willingness and ability of a producer to produce and sell a product
Demand
the desire to have some good or service and the ability to pay for it.
Equilibrium point
the point at which product demanded equals product produced
Stock inflation
when many people want to buy stock in a certain company, they are willing to pay more for it
Stock deflation
when many people want to sell sell stock in a certain company, the abundance of stocks for sale causes the price to decrease
Stock quotation
the purchasing price of stock at a particular time
Too much stuff + Not enough money
Deflation
Not enough stuff + Too much money
Inflation
New York Stock Exchange
One of the largest securities market in the world
NASDAQ
Technology market
Bull market
Market going up
Bear market
Market going down
current trading price of one unit of a particular security
last
the difference between yesterday’s price and the most recent price
change
the percent change in the stock versus the price at closing time yesterday.
percent change
total number of shares that have been traded on the most recent trading day
volume
the highest stock price of the current day
day’s high
the lowest stock price of the current day
day’s low
the price paid in the stock’s first transaction in the current trading day
open
The stock price at the end of yesterday’s trading session
previous close
the price at which someone is willing to buy a stock, this is what you get when you sell the stock
bid
the price at which a holder of a stock is willing to sell
ask
the highest price of an individual stock during the past year
52-week high
the lowest price of an individual stock during the past year
52-week low
the latest closing price divided by the latest 12 months’ earning per share
P/E
Total earnings divided by the number of stocks issued
earnings/share
the cash payment made per share by the company to its shareholders
dividend/share
the yield on a given investment based on its current price. You can calculate this by dividing the dividend paid for the year into the current price
Current div. yield
the value of a company’s outstanding shares. This is determined by multiplying the number of shared issued by the current price per share
market cap
number of shares that have been issued and are in the hands of the public
Number share outstanding
an organization that provides a marketplace for the trading of a listed stock. The New York Stock Exchange and Nasdaq are the biggest in the United States
exchange
The way a nation’s economics is organized based on who makes economic decisions
economic systems
Based on tradition, Economic decisions are based on those made in the past, Maintaining traditional roles is necessary for the stability of the economy
Bartering or trading is an essential piece of this type of economy
Traditional economy
Economic Decisions are made by individuals as workers, business owners and savers.
This is the economy in the United States
Market economy
Economic decisions are made by an individual or group based on what the believe is best for the nation. Usually a government body makes these decisions. USSR and Rural Communist China are examples.
Command economy
Who is the head of the Federal reserve
Janet Yellen
How does money go from households to businesses?
labor/payments
How does money go from households to government?
taxes/labor
How does money go from government to households?
services/income
How does money go from government to businesses?
services/payments
How does money go from businesses to households?
income/goods and services
How does money go from businesses to government?
taxes/goods and services
