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Economics > Final Exam > Flashcards

Final Exam Flashcards

1
Q

The economic equivalent of the evolutionary idea of survival of the fittest

A

Economic Darwinism

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2
Q

Equally distributing a nation’s pool of wealth to all its citizens

A

Economic leveling

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3
Q

If a business firm takes a _______ ___________ approach, it relies more on human labor

A

Labor intensive

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4
Q

During times of _________ _________, a nation’s business firms increase their production of goods and services with greater efficiency

A

Intensive growth

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5
Q

Goods that individuals purchase for personal use

A

Consumer goods

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6
Q

What firms use to produce other consumer items

A

Capital goods

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7
Q

Firms that mostly use automated equipment for labor

A

Capital intensive

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8
Q

The only economic right a nation should entitle to its citizens is the right to own and use property without government interference

A

Libertarian fairness

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9
Q

Each person in a nation has a right to a part of that nation’s wealth simply because they are a part of the human race

A

Egalitarian fairness

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10
Q

An increase in the quantity of goods and services a nation can produce

A

Economic growth

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11
Q

What is a society’s economic problem?

A

How best to accomplish its economic goals

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12
Q

How is the consumer goods/capital goods trade off a matter of spending vs. saving?

A

When people spend money for consumer goods rather than save it, financial institutions do not have money available to loan to businesses and the inverse is true

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13
Q

What way does the bible give for a person to generate his own personal income? Give a bible verse to support this.

A

Work- Proverbs 10:4, Proverbs 12:27, Proverbs 22:29

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14
Q

What should be the standard that Christians use to answer the distribution question?

A

Scripture

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15
Q

How is unemployment a problem for society?

A

Waste of human labor and is usually accompanied by poverty, crime, and despair

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16
Q

True/ False: What will be produced is one of the three critical questions every society must answer when seeking to meet its economic goals.

A

True

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17
Q

True/ False: Loving your neighbor isn’t one of the three biblical principles that provide a basis for our treatment of the poor.

A

False

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18
Q

True/ False: A labor intensive business uses a lower number of workers than a capital intensive business.

A

False

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19
Q

True/ False: With extensive growth, an economy produces less goods and services by decreasing its amount of land, labor, and capital.

A

False

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20
Q

True/ False: A low level of unemployment and a fair distribution of income are two of the four economic goals most societies have.

A

True

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21
Q

Socialism in its most extreme form

A

Communism

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22
Q

When a nation’s government assumes ownership of companies on a large scale

A

Nationalism

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23
Q

When the national government should be both the central owner and decision maker in all economic affairs of the state

A

Centralized socialism

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24
Q

High taxes and redistributed funds OR a nation under extreme state capitalism

A

Welfare state

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25
Q

To let alone OR what Adam Smith saw as the true path to national enrichment

A

Laissez faire

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26
Q

True/ False: When a nation buys more goods from other nations than it sells to them, that nation has a favorable balance of trade.

A

False

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27
Q

True/ False: Eastern European nations pioneered the economic policy of mercantilism.

A

False

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28
Q

True/ False: With capitalism, the government generally has more control over the private business owner.

A

False

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29
Q

True/ False: Public goods are usually provided by government because business firms could not supply them and make a profit.

A

True

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30
Q

Capitalism in its most extreme form, really only exists as an economic theory

A

Radical capitalism

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31
Q

When a nation sells more goods to other nations than it purchased from them

A

Favorable balance of trade

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32
Q

Private citizens own the vast majority of natural resources, financial capital, and labor but the government freely intervenes in economic decision making

A

State capitalism

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33
Q

Marx argued that any arrangement of the tools of production short of total state ownership would be counterproductive

A

Communist Manifesto

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34
Q

Form of capitalism that arose from the writings of Adam Smith

A

Classic liberal capitalism

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35
Q

Good and services that benefit all or nearly all of a nation’s people

A

Public goods

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36
Q

Transitional economic system bridging the gap between capitalism and socialism

A

Social democracy

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37
Q

When a government decides to sell their nationalized businesses back to private stockholders

A

Privatization

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38
Q

More government control in an economy

A

Socialism

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39
Q

Less government control in an economy

A

Capitalism

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40
Q

What was the major economic goal of European countries from the 1500’s to 1700’s?

A

Mercantilism, wanted to increase their holdings of gold and silver

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41
Q

Name three economic systems and for each one answer who owns the factors of production and who owns the three key economic questions.

A

Page 120

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42
Q

Name two economic principles of capitalism supported by Scripture and give a reference for each.

A

1) private ownership of property- Acts 5:4

2) principle of individual accountability- Luke 12:47-48

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43
Q

According to Adam Smith, what are the two keys to the economic prosperity of a nation?

A

1) limited government

2) personal responsibility

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44
Q

According to Adam Smith, what were two flaws in mercantilist economic policy?

A

1) the nation would exploit its resources to accumulate gold and silver at the expense of its own people
2) the aggressive actions of the mercantilist nation would create enemies

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45
Q

True/ False: Exploration is not one of the five points of mercantilism.

A

False

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46
Q

True/ False: The full title of Adam Smith’s landmark economic treatise is “An Inquiry Into the Nature and Causes of Nations”.

A

False

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47
Q

True/ False: According to the classical definition, liberalism does not equal liberty.

A

False

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48
Q

True/ False: One of the three functions of government according to Adam Smith is to protect its citizens from foreign invasion.

A

True

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49
Q

True/ False: Because it denies the legitimacy of government, radical capitalism is approved by Scripture.

A

False

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50
Q

General public owns and government manages

A

Public corporation

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51
Q

After buying shares of this, a person becomes owner of part of a corporation

A

Stock

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52
Q

Owned by individual citizens

A

Private corporation

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53
Q

Business with at least one general partner who has unlimited financial liability

A

Limited partnership

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54
Q

The lender

A

Creditor

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55
Q

A business enterprise with two or more persons as the owners

A

Partnership

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56
Q

True/ False: A limited partner holds all management responsibilities and makes all business decisions.

A

False

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57
Q

A separate entity recognized by law

A

Corporation

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58
Q

The act of becoming security for or pledging to undertake another’s debt

A

Surety

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59
Q

A business firm with one owner

A

Sole proprietorship

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60
Q

Sets money in the business and has the right to inspect the books and share in the profits of the firm

A

Limited partner

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61
Q

When a credit-worthy person promises to pay a loan if the original borrower cannot

A

Cosigning

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62
Q

What are three advantages of a sole proprietorship?

A

1) freedom to enter/exit the market easily
2) freedom from outside control
3) freedom to retain info

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63
Q

What are the disadvantages of a partnership?

A

1) unlimited personal financial liability
2) uncertain life
3) potential conflicts between the partners

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64
Q

What are three advantages of incorporation?

A

1) limited personal financial liability
2) experienced management and specialized employees
3) continuous life

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65
Q

An LLC combines the benefits of which two forms of business ownership?

A

Partnership and corporation

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66
Q

According to the law, what is a corporation and what are it’s important properties?

A

An artificial being, invisible, intangible, and existing only in the contemplation of the law
Important properties: immortality and individuality

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67
Q

True/ False: Two of the advantages of a partnership are greater management skills and greater possibilities of keeping competent employees.

A

True

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68
Q

True/ False: Two of the disadvantages of a sole proprietorship are unlimited personal financial liability and limited life.

A

True

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69
Q

True/ False: Scripture warns against becoming surety for another’s debts.

A

True

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70
Q

True/ False: Two of the disadvantages of incorporation are lower taxes and less government regulation.

A

False

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71
Q

True/ False: Corporations are the most common form of business organizations in the USA.

A

False

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72
Q

A distribution of a portion of a corporation’s profits

A

Dividends

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73
Q

Stockbrokers work for this fee

A

Commission

74
Q

Where merchants trade stocks

A

Stock exchanges

75
Q

The most well known stock index

A

DJIA

76
Q

True/ False: The S&P 500 is intended to give a broad perspective on business in the US.

A

True

77
Q

When stock prices rise in an industry of across the entire market simply because of expectations and they rise in excess of the corporations’ true value

A

Speculative bubble

78
Q

A group of stocks high are organized to help identify trends in certain industries

A

Stock indexes

79
Q

True/ False: An IPO is known as an Initial Private Offering.

A

False

80
Q

Founded by the government in 1934 to help ensure that corporations provide accurate and current info to the public about their financial situations and business dealings

A

Securities and exchange commission

81
Q

Those who buy and sell stocks for the purpose of taking advantage of short-term price changes are engaging in this practice

A

Speculation

82
Q

One of the most well-known stock markets

A

New York Stock Exchange

83
Q

A person who generally works for a brokerage company and who specializes in buying and selling stocks on behalf of clients

A

Stockbroker

84
Q

The most prevalent type of stock that companies offer and represents true ownership of the firm

A

Common stock

85
Q

Another name for stock traders

A

Floor traders

86
Q

Another of the most well-known stock markets

A

NASDAQ

87
Q

Shareholders who own this type of stock receive their share payments before all others

A

Preferred stock

88
Q

Used to be paper from a stock ticker but is now an electronic message board

A

Tape

89
Q

Privately managed stock portfolios

A

Mutual funds

90
Q

List three reasons that stock markets are important to the economy.

A

1) provide a place where corporations can raise needed revenue
2) provide opportunities for individuals to invest
3) provide valuable info concerning the state of the nation’s economy

91
Q

Identify each of the following as being associated with common or preferred shares of stock:
A. Shareholders receive dividends first
B. Owners have voting rights
C. Considered true ownership

A

A. Preferred
B. Common
C. Common

92
Q

When and why was the SEC founded?

A

Founded following the Great Depression in order to protect investors by regulating brokers and exchanges and ensuring that corporations provide accurate info

93
Q

In what two ways is a stock market like other markets?

A

It is a place for people who want to buy and sell to come together and the price of things are based on what consumers are willing to pay

94
Q

Owning shares of stock not only makes a person a partial owner of a corporation but also gives that person what other opportunity?

A

Vote on business decisions proposed by the board of directors

95
Q

True/ False: The NASDAQ is the largest stock exchange in the US that has no trading floor.

A

True

96
Q

True/ False: The S&P 500 tracks industrial production along with other types of industries.

A

True

97
Q

True/ False: “Buy high, sell low”.

A

False

98
Q

True/ False: Stock exchanges originated in Ireland and Belgium.

A

False

99
Q

True/ False: The first stock exchange in the US developed in Philadelphia in 1790.

A

True

100
Q

When firms sell the same good to different buyers at different prices

A

Price discrimination

101
Q

When firms require smaller companies to purchase their full line of products

A

Tying contracts

102
Q

When the government allows a firm an exclusive right to provide a good or service

A

Legal monopoly

103
Q

An agreement among a small number of producers to reduce their output and increase prices

A

Collusion

104
Q

Many producers of slightly differentiated goods

A

Imperfect competition

105
Q

True/ False: With perfect competition, no single firm controls the price of products.

A

True

106
Q

True/ False: Barriers to entry may be either natural or artificial.

A

True

107
Q

True/ False: Differentiated products are exactly alike, regardless of which firm produced them.

A

False

108
Q

True/ False: Industry refers to the arrangements that people have developed for trading with one another.

A

False

109
Q

“Selling by a few”

A

Oligopoly

110
Q

The arrangements that people have developed for trading with one another and competition is the struggle each firm experiences as it seeks to survive and then thrive within those arrangements

A

Market

111
Q

Visibly different from one firm to another

A

Differentiated products

112
Q

Occur when firms already in the industry own all a vital natural resource that a new firm would need to enter the market

A

Natural barrier to entry

113
Q

Form of market organization in which there is only one supplier in the industry

A

Monopoly

114
Q

When a firm controls 100% of a resource that is essential to an industry

A

Natural monopoly

115
Q

When a firm places one or more directors on the boards of competing firms

A

Interlocking directorates

116
Q

When the head of a large company persuades other firms to put their stock in one account

A

Trust

117
Q

Agreement among a small number of producers to reduce their output and increase prices

A

Collusion

118
Q

What is an industry?

A

A group of businesses that sell a similar product, sell to a certain group of customers, or produce their product in a similar way

119
Q

List the four different characteristics of market organization.

A

1) number of firms in the industry
2) differences in products sold
3) control of price
4) ease of entering/exiting market

120
Q

What government agency was created to enforce a particular act from 1914 and what additional responsibility was it later given?

A

Federal Trade Comission- consumer protection

121
Q

Why is it extremely difficult for a monopolistic firm to exit the industry?

A

The firm is the sole provider of a product or service

122
Q

What type of business is one of the best examples of perfect competition?

A

Farming a certain crop (soybeans, corn, wheat, etc)

123
Q

What is the most prevalent form of competition in America today?

A

Imperfect competition

124
Q

What is the most important characteristic of an oligopoly and what does this term mean?

A

Mutual interdependence- the production decisions of one firm affect the profits of another

125
Q

List three of the five congressional acts that were passed between 1890 and 1950 to preserve competition.

A

1) Sherman Anti-Trust Act of 1890
2) Clayton Act of 1914
3) Robinson-Patman Act of 1936

126
Q

What is the difference between a monopoly and a trust?

A

Monopoly- one business

Trust- multiple businesses acting as one under the same manager

127
Q

True/ False: An anticompetitive takeover is when a few big companies require that smaller companies guy from them and purchase their full line of products.

A

False

128
Q

True/ False: A legal monopoly is when the government does not allow a firm the exclusive right to provide a good or service.

A

False

129
Q

True/ False: A cartel has nothing to do with collusion.

A

False

130
Q

An oligopoly composed of two business firms

A

Duopoly

131
Q

Exists when there are many producers selling an identical product, no single firm controls the price, and businesses find it relatively easy to enter and exit the market

A

Perfect competition

132
Q

How does Romans 12:2 apply to the development of the one’s opinions?

A

The renewing of the mind will transform a person’s ideas about public policy

133
Q

Identify the four stages of public policy development.

A

1) identifying the issue
2) setting the agenda
3) formulating policy
4) implementation and evaluation

134
Q

What are the basic modern implications of the words “liberal” and “conservative”?

A

Liberalism- implies a belief that more government influence is better
Conservatism- usually implies a reluctance to expand government authority

135
Q

How are executive and judicial branches of government involved in public policy?

A

Executive branch- State of the Union address, executive orders, treaties, and diplomatic agreements
Judicial branch- court decisions

136
Q

Why must politicians be wary of public opinion?

A

Public opinion may change quickly and may also be based on incorrect info

137
Q

True/ False: Another name for an interest group is “influence group”.

A

False

138
Q

True/ False: The media would never give up certain info more extensive or prominent coverage to manipulate the public.

A

False

139
Q

True/ False: Three of the five categories of interest groups are economic, single-interests and civic.

A

True

140
Q

True/ False: With opinion polls, different wording of specific questions never really leads people to make different responses.

A

False

141
Q

True/ False: Some public opinion issues have lasting interests while others are short-lived.

A

True

142
Q

The arrangements that people have developed for trading with one another and competition is the struggle each firm experiences as it seeks to survive and then thrive within those arrangements

A

Market

143
Q

Visibly different from one firm to another

A

Differentiated products

144
Q

Occur when firms already in the industry own all a vital natural resource that a new firm would need to enter the market

A

Natural barrier to entry

145
Q

Form of market organization in which there is only one supplier in the industry

A

Monopoly

146
Q

When a firm controls 100% of a resource that is essential to an industry

A

Natural monopoly

147
Q

When a firm places one or more directors on the boards of competing firms

A

Interlocking directorates

148
Q

When the head of a large company persuades other firms to put their stock in one account

A

Trust

149
Q

Agreement among a small number of producers to reduce their output and increase prices

A

Collusion

150
Q

What is an industry?

A

A group of businesses that sell a similar product, sell to a certain group of customers, or produce their product in a similar way

151
Q

List the four different characteristics of market organization.

A

1) number of firms in the industry
2) differences in products sold
3) control of price
4) ease of entering/exiting market

152
Q

What government agency was created to enforce a particular act from 1914 and what additional responsibility was it later given?

A

Federal Trade Comission- consumer protection

153
Q

Why is it extremely difficult for a monopolistic firm to exit the industry?

A

The firm is the sole provider of a product or service

154
Q

What type of business is one of the best examples of perfect competition?

A

Farming a certain crop (soybeans, corn, wheat, etc)

155
Q

What is the most prevalent form of competition in America today?

A

Imperfect competition

156
Q

What is the most important characteristic of an oligopoly and what does this term mean?

A

Mutual interdependence- the production decisions of one firm affect the profits of another

157
Q

List three of the five congressional acts that were passed between 1890 and 1950 to preserve competition.

A

1) Sherman Anti-Trust Act of 1890
2) Clayton Act of 1914
3) Robinson-Patman Act of 1936

158
Q

What is the difference between a monopoly and a trust?

A

Monopoly- one business

Trust- multiple businesses acting as one under the same manager

159
Q

True/ False: An anticompetitive takeover is when a few big companies require that smaller companies guy from them and purchase their full line of products.

A

False

160
Q

True/ False: A legal monopoly is when the government does not allow a firm the exclusive right to provide a good or service.

A

False

161
Q

True/ False: A cartel has nothing to do with collusion.

A

False

162
Q

An oligopoly composed of two business firms

A

Duopoly

163
Q

Exists when there are many producers selling an identical product, no single firm controls the price, and businesses find it relatively easy to enter and exit the market

A

Perfect competition

164
Q

What term implies that a merchant must accept in the payment of debts whatever the government declares to be money?

A

Legal tender

165
Q

What three functions does money serve?

A

1) a means of payment for goods and services
2) a measure of value
3) a means of storing purchasing power

166
Q

What characteristics should an effective monetary system possess?

A

1) convenience
2) portability
3) divisibility
4) durability
5) stability

167
Q

What are the three kinds of money that can circulate in an economy?

A

1) commodity money
2) representative money
3) fiat money

168
Q

Name the two measures of the money supply discussed in the book and list what each includes.

A

1) M-1: comprises paper currency, coins, traveler’s checks, and checking accounts
2) M-2: comprises a variety of savings accounts and M-1

169
Q

What does it mean to say that the United States has a dual banking system?

A

There are banks regulated by state charters and banks regulated by national charters

170
Q

What are the three functions of commercial banks?

A

1) accepting deposits
2) extending loans
3) providing miscellaneous services

171
Q

Which type of thrift usually originates with a group of people who have something in common (usually employment)?

A

Credit unions

172
Q

Give an example of a contractual saving institution.

A

Insurance companies

173
Q

Name an advantage and a disadvantage of the traditional money system used on Yap Islands.

A

Advantage- very easily identifiable

Disadvantage- lack of portability

174
Q

How does money act as a store of purchasing power?

A

By keeping its face value, money can be received and exchanged for something at one time and for something of comparable value at a later time

175
Q

Which characteristic of money do you consider the most important and why?

A

Opinion

176
Q

Are today’s coins full-bodied or token coins? Explain.

A

Token coins, because the metal in them is of less value than their face value

177
Q

What is the name given to unbanked money when it is issued by a government decree?

A

Fiat money

178
Q

What two factors keep the fiat system functioning?

A

1) faith that others will accept the money that we have accepted
2) a limited quantity of that money

179
Q

What type of money does the United States currently use?

A

Fiat money

180
Q

Why can commercial banks also be referred to as full-service banks? Give examples.

A

They offer a wide range of service to their customers, such as checkings and savings accounts, debit and credit cards

181
Q

For what economic position was Milton Friedman a leading spokesman and what did that position see as the principle cause for inflation?

A

Advocated the monetarist approach and the principle cause for inflation was the money supply

Economics (22 decks)

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