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Economics > Midterm > Flashcards

Midterm Flashcards

1
Q

The study of how people seek to satisfy their needs and wants by making choices

A

Economics

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2
Q

Air, food, water, shelter

A

Need

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3
Q

Something we desire

A

Want

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4
Q

Actions or activities

A

Services

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5
Q

Physical objects

A

Goods

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6
Q

Knowledge and skills a worker gains through education and experience

A

Human capital

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7
Q

Effort that a person devoted to a task for pay

A

Labor

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8
Q

Producers will not or cannot offer other goods or services at the current price

A

Shortage

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9
Q

Limited quantities of resources to meet unlimited wants

A

Scarcity

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10
Q

Human-made resources that is used to produce other goods and services

A

Physical capital

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11
Q

All natural resources used to produce goods and services

A

Land

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12
Q

Land, labor, and capital

A

Factors of production

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13
Q

Human-made objects used to create other goods and services

A

Capital

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14
Q

Ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services

A

Entrepreneur

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15
Q

Which of the following is not considered a NEED according to your book ?

A

A nice car

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16
Q

WhicH of the following is a WANT a cording to your book ?

A

A nice car

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17
Q

Which of the following is not considered a country’s resources ?

A

Air

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18
Q

Cost always refers to money

A

False

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19
Q

Economies may operate ineffectively

A

True

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20
Q

A production possibilities curve shows alternative ways to USA an economy’s productive resources

A

True

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21
Q

Thinking in the margins is only about thinking how much more you can do

A

False

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22
Q

In your own words, define economics

A

Our choices and mindset alters our wants and needs

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23
Q

In your own words, define wants and needs

A

Wants- live without

Needs- can’t live without

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24
Q

In your own words, describe trade-offs

A

Choosing one option over another for a different outcome

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25
Q

If there is a large supply and low demand, prices would typically

A

Fall

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26
Q

If there is a short supply and high demand, prices would typically

A

Rise

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27
Q

A shortage is always permanent

A

No

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28
Q

Economics is the study of

A

Scarcity

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29
Q

Scarcity means something is temporarily unavailable

A

No

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30
Q

If IBM issues a bond and you buy their bonds, you own part of the company

A

No

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31
Q

If you buy IBM stock, you own part of the company

A

Yes

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32
Q

If you start saving for retirement now, you have a better chance of hitting your retirement goals then if you wanted to save until you were 40

A

Yes

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33
Q

A bill from your doctor

A

Expense

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34
Q

Your car

A

Assets

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35
Q

Car loan

A

Liabilities

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36
Q

Your paycheck

A

Income

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37
Q

A social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society is called

A

Socialism

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38
Q

Economic systems that are based on voluntary exchanges in markets are called ___________ __________ Economics

A

Free market

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39
Q

What is the most common reason someone starts their own business ?

A

Freedom

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40
Q

America is considered a Land of _______ because of our Free Enterprise

A

Opportunity

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41
Q

If you have a successful business, can the government of the U.S. take over control to run it for themselves without due process ?

A

No

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42
Q

What is Macroeconomics ?

A

The study of the behaviors and decision making of entire Economics

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43
Q

What is Microeconomics ?

A

The study of the behavior and decision making small units as small units, such as individuals, families, and businesses

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44
Q

What does GDP stand for ?

A

Gross Domestic Product

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45
Q

The study of economics begins with the idea that people cannot have everything they ___________ or _________

A

Need

Want

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46
Q

A ________ is something like air, food, or shelter

A

Need

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47
Q

A _________ is just about everything else

A

Want

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48
Q

We discussed two types of capital, _____________ and __________

A

Physical

Human

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49
Q

Human-made objects used to create other goods and services are called __________ capital

A

Physical

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50
Q

____________ capital is the knowledge and skills a worker gains through education and experience

A

Human

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51
Q

As discussed in class, nobody can take away your _________ or ____________

A

Education

Experience

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52
Q

Ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services are called __________

A

Entrepreneurs

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53
Q

___________-__________ are all the alternatives which we give up whenever we choose one course of action over another

A

Trade-off

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54
Q

The most desirable alternative given up as the result of a decision is called the _________ cost

A

Opportunity

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55
Q

For most decisions there are pros and cons. In economic terms we should do a ___________ / ___________ analysis

A

Cost

Benefit

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56
Q

Costs are financial

A

False

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57
Q

Which of the following usually gives the most protection to an individual

A

Incorporation

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58
Q

LLC stands for

A

Limited liabilities corporation

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59
Q

Does LLC typically issue stock and bonds ?

A

No

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60
Q

Why do nations trade ?

A

Lacking in resources, higher in profit

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61
Q

Define opportunity cost

A

The most desirable alternative given up as a result of a decision

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62
Q

What is an export ?

A

Putting out goods to other countries

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63
Q

What is an import ?

A

Something we get from other countries

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64
Q

What country is the largest importer ?

A

United States

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65
Q

What country is the largest exporter ?

A

United States

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66
Q

What are the thee most common trade barriers ?

A

Import quotes
Voluntary export restraint (VER)
Tariffs

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67
Q

Define tariffs

A

Tax on imported goods

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68
Q

What is a trade war ?

A

Escalating trade barriers

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69
Q

Define protectionism

A

When the nations protect the resources that is being traded

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70
Q

Does the US have a trade surplus or trade deficit ?

A

Trade deficit

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71
Q

Why are we in a trade war with China ?

A

Exporting to many goods at cheaper prices

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72
Q

Air, food, water, shelter, are examples of

A

Need

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73
Q

Something we desire is an example of

A

Want

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74
Q

The study of how people seek to satisfy their needs and wants by making choices

A

Economics

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75
Q

Producers will not offer goods or services at the current price

A

Shortage

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76
Q

Limited quantities of resources to meet unlimited wants

A

Scarcity

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77
Q

Human-made resource that is used to produce other goods and services ____________ capital

A

Physical

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78
Q

Ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services

A

Entrepreneurs

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79
Q

Define “cost” as taught in class

A

Something we end up losing in a situation

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80
Q

Define opportunity cost

A

The most desirable alternative given up as the result of a decision

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81
Q

Define trade-offs

A

Sow thing we give up in making a decision

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82
Q

Give an example of a trade-off

A

In class, Kery was offered $20 but he would have to get expelled but is he didn’t want that he’ll give it up

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83
Q

What is the difference between an LLC and a Sole-proprietor ?

A

LLC- deal with smaller businesses

Sole-Proprietor- all liabilities

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84
Q

What keeps a manufacturer from charging way too much for an item ?

A

Competition

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85
Q

Define incentive

A

Motivation

Something you get out of a situation

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86
Q

Define profit

A

How much the item is

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87
Q

Define communism

A

Government control

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88
Q

Define Laissez Faire

A

The doctrine that states that government generally should not intervene in the marketplace

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89
Q

Define private property

A

Property that is owned by the individuals or companies, not by the government of the people as a whole

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90
Q

How does welfare attempt to raise poor people’s standard of living ?

A

It doesn’t raise it up, welfare helps the people

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91
Q

Why does poverty exist in a free market economy ?

A

People can choose to make their own money

92
Q

What is the difference between cash transfers and in-kind benefits ?

A

Cash transfers- direct payments of money to eligible poor people
In-kind benefits- goods and services provided for the free or at greatly reduced prices

93
Q

How is Social Security an example of income redistribution ?

A

By taking a small amount of earned income and storing over time

94
Q

What constitutional guarantees underlie the American free enterprise system ?

A

The Bill of Rights to the United States

95
Q

Why have some nations begun a transition to free enterprise ?

A

The people want control what goes on in the market place instead of government choosing for them

96
Q

Define Tariff

A

A tax on imported goods

97
Q

What are the three trade barriers we discussed in class ? List each one and define

A

Import quotas- a limit on the amount of a good that can be imported
VER- limited exports to a specific country
Tariffs- a tax on imported goods

98
Q

What is a trade imbalance ?

A

When a nation puts out so much product, but brings a smaller amounts of imports (vise versa)

99
Q

Define “Fracking”

A

A light crude, oil you take out of the ground with machines

100
Q

Why did Fracking become affordable ?

A

Gas prices rose

101
Q

In a free market economy you have periods of ___________ and _________

A

Surplus

Deficit

102
Q

Name three reasons for import Quotas

A

Protect U.S. manufacturing
Protect consumers
Protect prices

103
Q

When unemployment is below 4%-5% it is effectively considered what ?

A

Full employment

104
Q

Name three things that may cause inflation

A

Devaluing currency
A shortage
Slow economy

105
Q

Are we on the Gold Standard or on the Floating Exchange Rate (Floating Dollar) ?

A

Floating Dollar

106
Q

Define Money Manipulation

A

Devaluing a currency on purpose to get around the tariff

107
Q

Why might a country devalue their currency ?

A

Increase domestic spending
Slow down economy
Get around tariffs

108
Q

Benefit of devaluing a country’s currency

A

Increasing exports

Increasing domestic spending

109
Q

Costs for devaluing a country’s currency

A

Slow economy
Increasing unemployment rate
Increasing debt payment
Inflation

110
Q

What is the name of Chinese currency ?

A

Yuan

111
Q

Which of the following is not a possible long-term negative impact on a nation’s economy if they devalue their currency ?

A

Lower debt payments

112
Q

Which of the following is a short-term positive impact on a nation’s economy if they devalue their currency

A

Increased domestic spending on domestic goods

113
Q

What are three positive things that may happen after a natural disaster ?

A

Short-term employ employment rate
Government aid
Money from the government

114
Q

What are three negative things that may happen during/after a natural disaster ?

A

Business close
Unemployment rate goes up
Loss of assists

115
Q

Define shareholder

A

A owner of stock

116
Q

Define shareholder

A

A person of interest or concern with something, especially a business

117
Q

How might our government reduce spending ?

A

Military spending

Infrastructure

118
Q

How might our government increase income ?

A

Tariffs

Taxes

119
Q

Does a company have a moral or ethical obligation to make sure their suppliers do not use slave/child labor ?

A

In my opinion, I believe they do

120
Q

Name three ways a Wal-Mart type of store may hurts local economy

A

Has other stores going out of business
Keep paying at a cheaper price
Taking more products from other companies

121
Q

Name three ways a Wal-Mart type of store may help a local economy

A

It’s well know
Get jobs
Cheaper prices

122
Q

Why do we have issues today with China as a trade partner ? Name three things

A

Devalue currency
To much import
Steal technology from us

123
Q

Whose interest does a business have as their top priority ?

A

Shareholders

124
Q

Do most countries carry external debt ?

A

Yes

125
Q

What is the desired outcome of our trade war with China ?

A

We will have more of a trade imbalance

126
Q

What does GDP stand for ?

A

Gross domestic product

127
Q

GDP is the, “dollar value of all final ___________ and _________ produced within a country’s borders in a given year.

A

Goods and services

128
Q

Does GDP include intermediate goods ?

A

No

129
Q

What are intermediate goods ?

A

Goods and services to make the final product

130
Q

Would GDP include cars made in Ohio by a company owned by a Japanese company ?

A

Yes

131
Q

Would GDP include cars made in Brazil by an American owned company ?

A

No

132
Q

Your neighbor brought a brand new house in 2010. He was transferred to a new job in Georgia so he sold his house last week. Would this be included in the US GDP for this year ?

A

No

133
Q

In the above scenario, would the fee paid to the real estate agent who handled the resale of the house last week be counted in this year’s GDP ?

A

Yes

134
Q

You hired a contractor to build a new home for you today. Would the lumber, nails, shingles, windows, and doors be included in this year’s GDP ?

A

No

135
Q

In question 8, would the sale of the home be included in this year’s GDP ?

A

Yes

136
Q

When comparing the “Expenditure Approach” and the “Income Approach” for figuring out the GDP, should they give us the same total or very differs totals ?

A

Same

137
Q

Of the following, circle all of the durable goods

A 
Stove 
Car 
Refrigerator 
Play Station 
Computers 
Lazy Boy Chair
138
Q

Of the following, circle all of the non-durable goods

A

Blue jeans
Green beans
Air Jordan’s

139
Q

Does measuring the GDP help determine how well the economy is doing ?

A

Yes

140
Q

What are the four phases of a business cycle ?

A

Expansion
Peak
Contraction
Trough

141
Q

An economy is said to be in a recession when GDP falls for how many consecutive quarters ?

A

2 quarters

142
Q

Does rising unemployment typically happen during periods of recession ?

A

Yes

143
Q

Does rising interest rates cause job growth to shrink or expand ?

A

Shrink

144
Q

The price paid for the use of borrowed money

A

Interest

145
Q

A paper currency issued during the Civil war

A

Greenback

146
Q

The ability to be used as, or directly converted into, cash

A

Liquidity

147
Q

Money in a checking account that can be paid out “on demand”

A

Demand deposit

148
Q

Objects that have value because the government has decreed that they are an acceptable means to pay debts

A

Fiat money

149
Q

Failing to pay back a loan

A

Default

150
Q

An institution for receiving, keeping, and lending money

A

Bank

151
Q

A card used to withdraw money from a bank account

A

Debt card

152
Q

Coins and paper bills used as money

A

Currency

153
Q

A widespread panic in which many people try to redeem their paper money at the same time

A

Bank run

154
Q

A monetary system in which paper money and coins had the value of certain amounts of gold

A

Gold standard

155
Q

The seizure of property from the borrowers who don’t repay their loans

A

Foreclosure

156
Q

A banking system that keeps only a fraction of its funds on hand and lends out the remainder

A

Fractional Reserve Banking

157
Q

A bank that belongs to the Federal Reserve System

A

Member bank

158
Q

The direct exchange of one set of goods or services for another

A

Barter

159
Q

All the money available in the US economy

A

Money supply

160
Q

A bank that can lend to other banks in time of need

A

Central bank

161
Q

A specific type of loan that is used to buy real estate

A

Mortgage

162
Q

The amount of money borrowed

A

Principle

163
Q

Anything that serves as a medium of exchange, a unit of account, and a store of value

A

Money

164
Q

A card entitling its owner to buy goods and services based on the owner’s promise to pay for those goods and services

A

Credit card

165
Q

A person or institution to whom money is owed

A

Creditor

166
Q

Before we were on the “Floating Dollar” the U.S. had its money backed by what valuable item ?

A

Gold

167
Q

When a country devalues its currency, do they typically see an increase or decrease in exports ?

A

Increase

168
Q

When a country devalues its currency, will their economy typically slow or grow in the long term ?

A

Slow

169
Q

What is the difference we discussed in class between a Charge Card (like American Express) and Visa card ?

A

Charge card is 100% payed off monthly

Visa card is when you have to pay back the interest

170
Q

Money held in a checking account is considered M1 or M2 ?

A

M1

171
Q

Money held in a savings account is considered M1 or M2 ?

A

M2

172
Q

What is the real estate appraisal ?

A

Estimation of value of the property

173
Q

If you were approved for a secured loan, you may have to give some kind of collateral. What is collateral ?

A

Something you can secure a loan

174
Q

If you default on a secured loan, they may ________ your collateral

A

Repossess

175
Q

What is P and I ?

A

Principle

Interest

176
Q

If GDP decreases for _____________ consecutive months, it is called a __________

A

Six

Recession

177
Q

If your bank need a temporary loan, they would get that loan from the ____________ Bank

A

Central

178
Q

If Rason’s Smelly Shoe Company had a record year in sales. Name three things we discussed in class they may do with their profits

A

Expansion
More employees
More product

179
Q

_______________ is king (Economically speaking)

A

Cash

180
Q

The greater the Risk the greater the potential

A

Reward

181
Q

If you have lack of cash to pay your bills, you are cash

A

Poor

182
Q

The Federal Reserve Bank is also known as the

A

The Fed

183
Q

Who issues credit cards ?

A

Banks

184
Q

When you use a Visa debit card, do you pay a bill at the end of the month or do funds automatically come out of your checking account at the time of the transaction ?

A

Funds automatically come out of your checking account at the time of the transaction

185
Q

Is M1 money considered Liquid Assets or Fixed Assets ?

A

Liquid assets

186
Q

Which typically has higher interest Checking accounts or Savings accounts ?

A

Savings

187
Q

Checking accounts are considered

A

Demand accounts

188
Q

Name a savings instrument that can be either short or long term, that earns interest, that’s has a penalty if you pull money out before its maturity date, and which typically locks in an interest rate

A

CD

189
Q

If you knowingly write checks without having the funds in the account, you may be guilty of

A

Check fraud

190
Q

If Ashley’s Lip Balm Company had a terrible year in sales p, name three things we discussed in class they may do with their profits

A

You can’t expand
Start dropping employees
Can’t make more product

191
Q

When comparing the “Expenditure Appeoach” and the “Income Aproach” for figuring out the GDP, what percentage differences would you expect to find ?

A

0%

192
Q

Name three things which we might come to expect during a recession

A

Stop buying producers
Lose consumers
Going out of business

193
Q

When a country devalues its currency, do they typically see an increase or decrease in imports ?

A

Decrease

194
Q

Our banks are part of the Fractional-Reserve Banking system meaning that they don’t hold all of your money in their values, instead they loan it out. However, they are required to keep a certain amount in their vault or on deposit with the Central Bank. What is the term for this amount ?

A

Reserve ratio

195
Q

OMB is the ____________ of ____________ and ______________

A

Office of management and budget

196
Q

What branch of government does the OMB fall under ?

A

Executive

197
Q

If revenues are equal to spending, it means we have a ___________ budget

A

Balance

198
Q

A plan for the federal government’s revenues and spending for the coming year is called the Federal __________

A

Budget

199
Q

When does the Fiscal Year begin for the U.S. Government ?

A

Oct 1

200
Q

What branch typically does the first draft of the budget ?

A

Executive

201
Q

From there it goes to

A

House of Representatives

202
Q

If the government wants to spend more then it has budgeted revenue, it must get more money. It can do this in the two ways. Name them:

A

Taxes

Bonds

203
Q

If the government takes in more than it spends it means we have a budget

A

Surplus

204
Q

If the government takes in less than it spends, it means we have a budget

A

Deficit

205
Q

If the government wants to increase spending and lower taxes, it must take on more

A

Debt

206
Q

If the government wants to decrease spending and lower taxes to encourage economic growth, this would be called an _______________ policy

A

Expansionary

207
Q

If the government wants to decrease spending and increase taxes, this would be called a __________________ policy

A

Contractionary

208
Q

When in a budget deficit, the government takes on debt. How ?

A

The government will typically issues bonds they will have to pay back

209
Q

Name one of the debt instruments. T-

A

Treasury bill

210
Q

Name another. T-

A

Treasury bond

211
Q

Name the third. T-

A

Treasury note

212
Q

Explain the political issues involved worth increasing spending on social programs without raising taxes or talking on more debt

A

The government would have to pay less on defense and would have to let go on some military

213
Q

With every dollar change in fiscal policy, whether it is an increase in spending or a decrease in taxes, it creates a greater than one dollar change in the national income. This is called the _________________ Effect

A

Multiplier

214
Q

Treasury Bills are repaid within ____________ years

A

3 months - 1 years

215
Q

Treasury Bonds are repaid within ________ years

A

30

216
Q

Treasury Notes are repaid within __________ years

A

2-10

217
Q

If you are an investor and want to buy U.S. Government Bonds and you believe that interest rates will go up in the near future, which treasury debt instrument would you buy ?

A

Bill

218
Q

If you are an investor and want to buy U.S. Government Bonds and you believe that long term interest rates are only going to go down, which treasury debt instrument would you buy ?

A

Bonds

219
Q

When the U.S. Government issues bonds, what effect does that have on future Federal Budget ?

A

The Federal Budget now has to include he new debt from the bonds

220
Q

If the government wants to slow the economy because of the fear of inflation, would it write an expansionary or contractionary budget ?

A

Contractionary

221
Q

We did not discuss in class yet, but your book discusses a way to respond to a budget deficit by creating money. If left unchecked, we could see hyperinflation. Define hyperinflation

A

A very high inflation

222
Q

For FY 2019, the federal budget is estimated to be $4.407 trillion. The estimated revenue will be $3.422. The leaves $985 billion shortfall. That shortfall is called a budget

A

Deficit

223
Q

For FY 2019, interest on the national debt is $363 billion. How does this effect the Federal Budget and why will this amount only get worse if we continue to run a deficit ?

A

It will effect the Federal Budget because it’s adding more money then the set that year and it’s taking more in then it should

224
Q

If interest payments on the national debt continue to rise, name three ways we will be forced to service it

A

Decrease infrastructure
Decreasing military spending
Increase taxes

225
Q

Debt is normal for a government, but serving that diet can get out of control. If you worked for the OMB, what would you do to decrease out national without creating hyperinflation, unemployment, or a recession ?

A

Would cut down on budget

226
Q

Right now in the world there is surplus oil. This has caused the price per barrel to

A

Decrease

227
Q

OPEC is discussing cutting output of oil. If they do,what effect will this have on global oil prices ?

A

Increase

Economics (10 decks)

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