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Economics > Midterm 1 > Flashcards

Midterm 1 Flashcards

1
Q

What happens to interest rates if inflation goes down?

A
  • Interest rates go up.
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2
Q

What are some common economic Goals?

A
  • Hight rate of growth
  • Full employment
  • Price Stability
  • Equitable distribution of income
  • Viable balance of payments
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3
Q

What does it mean to have a high rate of growth?

A
  • Increase of productivity of 4 to 5%
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4
Q

What does it mean to have full employment?

A
  • Suitable jobs for those looking for jobs.
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5
Q

What does it mean to have price stability?

A
  • Avoiding a rapid increase or decrease in prices.
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6
Q

What does it mean to have equitable distribution of income?

A
  • Progressive tax system
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7
Q

What is economic efficiency?

A
  • Max output with minimum input.
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8
Q

What is economic freedom?

A
  • High degree of freedom and choice.
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9
Q

What is economic Security?

A
  • Provided for poor and elderly.
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10
Q

What are the four economic resource categories?

A
  • Land
  • Labour
  • Capital
  • Entrepreneurial Ability
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11
Q

What are assumptions made when making a diagram?

A
  • Products, employment, production, fixed resources and fixed technology.
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12
Q

What is opportunity cost?

A
  • Cost of sacrificing parts of one sector of the economy to produce more elsewhere.
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13
Q

Advancement in technology leads to what?

A
  • Economic growth.
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14
Q

What are the economic systems?

A
  • Market Economy
  • Command System
  • Mixed Economy
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15
Q

What are the five primary questions to economic systems?

A
  • What to produce
  • How to produce
  • For whom to produce
  • How the system can accommodate change
  • How the system can promote growth on progress
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16
Q

What is command system?

A
  • There is no private ownership of land, all decisions are according to a central planning board.
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17
Q

What are some important points of Market economy?

A
  • Private ownership of property
  • Private ownership of land and capital by individuals
  • Private property rights
  • Freedom of choice and enterprise
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18
Q

How does the market system answer what to produce?

A
  • Consumer decides what should be produced.
  • Causes demand of resources
19
Q

How does the market system decide how to produce?

A
  • Maximum output with minimum input and move resources to industries where out put is high.
20
Q

How does the market system decide who to produce for?

A
  • Consumer income and wages will determine who can afford to pay for resources.
21
Q

How does the market system determine how to accommodate change?

A
  • Consumer taste and preference will determine which industries need to expand and contract.
22
Q

How does the market system determine how to promote growth?

A
  • Technological advancement and capital accumulation.
23
Q

What is a market?

A
  • Place where buyers and sellers exchange goods and services.
24
Q

What is a perfect competition market?

A
  • Large number of buyers and sellers in the market.
25
Q

What is the law of demand?

A
  • Inverse or negative relationship between price of product and quantity demanded.
26
Q

What are some determinants of demand?

A
  • Change in taste
  • Price of related products
  • Income
  • Expectation
  • Population
27
Q

What is a compliment?

A
  • Products used with another product
28
Q

What is the Law of Supply?

A
  • There is a positive relationship between quantity supply of product and price of the same product
29
Q

What are some determinants of supply?

A
  • Price of resources
  • Technology
  • Taxes and subsides
  • Expectation
  • Number of sellers in the market
30
Q

What does a surplus do to price?

A
  • Causes downward pressure on price.
31
Q

What does a shortage do to price?

A
  • Causes price to go up.
32
Q

What is a price floor?

A
  • Minimum price that is set for goods and services.
33
Q

What is a price ceiling?

A
  • Maximum price that is set for goods and services.
34
Q

What is the price elasticity of Demand?

A
  • Responsiveness of quantity demanded for a product by change in price of the same product
35
Q

If % ^ QD > % ^P then?

A

Demand is elastic

36
Q

If % ^ QD < % ^P then?

A

Demand is inelastic

37
Q

If % ^ QD = % ^P then?

A

Demand is unitary elastic

38
Q

No change in QD is what?

A

Perfectly inelastic

39
Q

Insignificant change in price is what?

A

Perfectly elastic

40
Q

What is the mid point formula?

A

Reference notes

41
Q

If demand is elastic what is Ed (Elasticity of Demand)

A

> 1

42
Q

If demand is inelastic what is Ed

A

<1

43
Q

If demand is unitary elastic what is Ed

A

=1

Economics (6 decks)

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