Homework Flashcards
4 ways economic systems differ in preconditions
R.E.E.H.
1) rules
2) economic institutions
3) economic resources
4) how wealth varies among nations
- human resources, natural resources, human capital, goals of institutions
Top GDP per capita (5)
1) USA
2) Sweeden
3) Germany
4) Japan
5) Russia
Name 6 or 7 economic outcomes
1) recent economic performance
- unemployment, inflation
2) the structure of output
3) the distribution of income
- unemployment rates
4) levels of income
5) environmental sustainability
6) employment
7) inflation
8) life expectancy
9) per-head income
Broad social goals
F.E.E.G.S.
1) freedom
2) efficiency
3) equity
4) growth
5) stability
Comparative economics definition?
The study of how systems differ between economies and how differences in systems determine economic outcomes
- how systems differ
- how differences determine outcomes
Political economics
Study of wealth and man
Economic liberalism
Philosophy that promotes freedom of action for the people and business firm through FREE TRADE, self interest, private property, laissez Faire, and competition
The legal system
O.F.E.B.A.C.S.
In most market economies, % of national income by the legal system is..?
In most market economies, % of national income by the legal system is small compared to the U.S., but is growing
1) ownership and property rights
2) freedom of entry
3) enforcement of controls and compensation
4) bankruptcy law
5) accounting and financial disclosure (standards)
6) clear definition of government responsibility
7) system of civil compensation
The objectives of government policy
A.R.S.
1) allocative function
- try to improve allocative efficiency of the economy
- issues= private v.s. Government production of goods/services
- issues= government regulation of products produces and of businesses v.s. non-intervention policy (laissez faire)
2) the (re)distribution function
-redistribution of income: support through transfer payments
-redistribution-in-kind: public provision of goods that might be supplied privately
Merit goods, healthcare, education, housing, food….
3) the stabilization function
-government responsibility for macroeconomic activity… Unemployment, inflation, economic growth
Fiscal & monetary policy
Classification of goods (allocative function)
(Pure) public good
Merit good
Quasi-public good
(Pure) public good
Not subject to exclusion rule and diminish-ability principle
Merit good
Provided by government as a redistributive or egalitarian measure
Quasi-public good
Information
-some information can be charged for
-scale efficiencies may exist if the government provides certain information and social spillover/externalities may exist
Cooperative
-A business owned by the people who use it
-Each stockholder only has one vote
..Makes it different from a corporation
..Distribution of net income is different too!
-After paying a nominal dividend to shareholders, any net income is distributed among the customers on a pro rata basis
(According to the amount of purchases from the cooperative)
Consumer cooperatives
In the U.S. They haven’t had national significance. They have been around for 100 years
- because of discount stores
- significant in Europe
Marketing cooperatives
Big in U.S. Agriculture
- sunkist oranges
- over 5,000 exist
- 9,000 credit unions exist
The market for financial assets
Action of financial market largely determines what companies…?
Action of financial market largely determines what companies grow, contract, or become defunct by regulating access to investment capital.
The ownership of stock…
- U.S. Individuals hold ?% of stock in total market capitalization, ?% in mutual funds, and ?/? of shares in financial institutions
- “popular capitalism” =stock market directly affects….?
- Japan and Europe??
-U.S. Individuals hold 48% of stock in total market capitalization
12% in mutual funds, 1/3 of shares in financial institutions
- “popular capitalism” stock market directly affects wealth and income of people
- direct link between financial performance and consumer spending
“Wealth effect”
- Japan and Europe hold less stock (people)
- Japan= cross shareholding
- Europe= Pension funds, insurance companies, banks
