Finals Loose Ends Flashcards
mixed economy
an economy that incorporates command and market economy features
circular flow
shows a business and a household, with two rings of the product and factor markets going through them
factors production
services and products used to create a finished product, such as labor and materials
marginal cost
the cost of using one more unit of good or service
3 economic questions
- what will be produced?
- How will it be produced?
- For whom will it be produced?
What is a regressive tax?
takes a larger percentage of money from lower incomes than the upper
What is property tax?
a tax based on the value of an individual’s or business’s assets
What is the income tax?
a tax based on an individual’s income from all sources
sales tax
tax based on designated good or service at time of purchase
Fiscal policy tools
expansionary and contractionary effects
Budget Categories
mandatory: entitlement programs such as medicaire and social security
discretionary
Aggregate Supply and Demand
the total amount of goods and services an area purchases
elasticity
describes how responsive a product is with changing economic conditions. More elastic, more changeable
equilibrium
the price at which the quantity demanded and quantity supplied are equal
monopolistic competition
when many sellers offer a similar, but not standard product
perfect competition conditions
- numerous buyers and sellers
- standardized product
- freedom to enter and exit markets
- independent buyers and sellers
Types of businesses
- sole propietorship
- partnerships
- public and private corporations
Functions of money
- medium of exchange
- standard of value
- store of value
monetary policy tools
Action 1: Open Market Operations
Action 2: Adjusting the Reserve Requirement
Action 3: Adjusting the Discount Rate
nominal vs. real GDP
in real GDP, inflation is taken into account
cost-push inflation
rise in price rise because factors of production increase
demand-pull inflation
When consumer demand outstrips supply
CPI (consumer pride index)
a measure of the price changes in a specific group of goods or services over a period of time in relation to a base year
Effects of inflation
debtors benefit and consumption goes up
