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STUDY SETS > ONLINE ECON > Flashcards

ONLINE ECON Flashcards

1
Q

What is Economics

A

The study of how people deal with scarcity.

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2
Q

Scarcity

A

Unlimited wants, limited resources.

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3
Q

Trade-Offs

A

All the options that are given up when a choice is made

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4
Q

Opportunity Cost

A

The next best option that is given up when a choice is made

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5
Q

Factors of Production

A

Land – natural resources
Labor – people and their skills
Capital – tools, machinery, factories
Entrepreneur – risk-taker that starts new businesses

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6
Q

Three Basic Questions of Economics

A

What to produce?
How to produce?
For whom to produce?

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7
Q

Division of Labor

A

Assigning workers small tasks

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8
Q

Specialization of Labor

A

Assigning each worker the task he is best at

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9
Q

What does a PPC show?

A

A PPC shows opportunity cost.

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10
Q

What shifts a PPC outward?

A

An increase or improvement in:
Technology
Labor
Capital
Taxes and gov’t regulations

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11
Q

Inputs

A

Resource used to make a good or service

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12
Q

Outputs

A

The good or the service

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13
Q

Economic System (aka an Economy)

A

Organized way to provide for the needs and wants of a society.

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14
Q

Three Major Economic Systems

A

Traditional – based on ritual/custom
Market – private citizens control the resources
Command – government controls the resources

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15
Q

Private Goods

A

Provided by businesses

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16
Q

Public Goods

A

Provided by the government

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17
Q

Capitalism (Market Economy)

A

Private ownership
Profit motive (people work for their own self-interest)
Competition among sellers
Little government regulation
Lots of freedom, growth, efficiency

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18
Q

Communism (Command Economy)

A

Government owns everything
No profit motive or incentive to work hard
Government has total control
Little freedom, growth, efficiency
High taxes

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19
Q

Consumer Sovereignty

A

Ultimately, consumers decide what will be made because each purchase is a “vote”

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20
Q

Adam Smith

A

Father of Capitalism; wrote about the invisible hand

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21
Q

Karl Marx

A

Father of Communism; wrote about the bourgeoisie (upper class) and the proletariat (lower class)

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22
Q

Mixed Economy

A

Any economy that has characteristics of more than one economic system

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23
Q

Three Types of Business Organization

A

Sole Proprietorship – owned by one person
Partnership – owned by more than one person
Corporation – legally separate from its owners

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24
Q

Four Types of Market Structure
(From most competitive to least competitive)

A

Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly

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25
Q

Perfect competition

A

Lots of small sellers
Identical products (don’t advertise)
Each seller has no ability to affect price
Easy for a new company to enter the market

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26
Q

Monopolistic Competition

A

Lots of small sellers
Differentiated products (advertise)
Each seller has no ability to affect price
Easy for a new company to enter the market

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27
Q

Oligopoly

A

A few, very large sellers
Differentiated products (advertise)
Each seller can affect the price
Difficult for a new company to enter the marke

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28
Q

Monopoly

A

One seller
Doesn’t need to advertise
Controls the price
Nearly impossible for a new seller to enter the market

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29
Q

Limited Liability

A

Limited responsibility for the losses/debts of a business.

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30
Q

Unlimited Liability

A

Unlimited responsibility for the loses/debts of a business.

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31
Q

Limited Life

A

The business ceases to exist once the original owner dies/quits.

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32
Q

Unlimited Life

A

The business continues to exist even after the original owner dies/quits.

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33
Q

Law of Demand

A

As price goes up, quantity demanded goes down.

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34
Q

Quantity Demanded

A

The amount demanded at one price (a point on the curve)

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35
Q

Demand

A

The amount demanded at all prices (the curve itself).

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36
Q

What changes QD?

A

A change in the price of the product

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37
Q

What changes D?

A

Change in # of consumers
Change in consumer incomes.
Change in consumer t / p / e
Change in a substitute
Change in a complement

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38
Q

Quantity Supplied

A

The amount supplied at one price (point on the curve).

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39
Q

Supply

A

The amount supplied at all prices (the curve itself).

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40
Q

Law of Supply

A

As price goes up, QS goes up.

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41
Q

What changes QS?

A

A change in the price of the product.

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42
Q

What changes S?

A

Government regulations
Technology
Inputs – changes in resources
Number of Sellers

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43
Q

Surplus

A

Surplus – QS > QD (too much)

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44
Q

Shortage

A

Shortage – QS < QD (not enough)

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45
Q

Price Floor

A

Lowest legal price; goes above equilibrium and causes surplus (minimum wage)

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46
Q

Price Ceiling

A

Highest legal price; goes below equilibrium and causes shortage (rent control)

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47
Q

Post High school Options

A

College, Trade schools, Military, Apprenticeship, Job Market

48
Q

Workplace skills

A

Work ethic, Punctuality, Time management, Teamwork, Communication skills, Good character

49
Q

Paying for College

A

Loans, Grants, Scholarships, Savings, Work Study

50
Q

FAFSA

A

Federal student aid, such as federal grants,work-study, and loans to help pay for college.

51
Q

GAfurtures

A

Includes national college and scholarship search to explore different schools and alternative ways to pay for their education.

52
Q

Generational Wealth

A

Assets passed by one generation of a family to another. Ex: stocks, bonds, real estate, family business

53
Q

Effects of social media

A

Your personal social media can help or hurt your career.

54
Q

Net Worth

A

Assets a person owns, minus the liabilities they owe.

55
Q

Three Categories of Taxes

A

Proportional – as income goes up, % of tax stays the same (flat tax)
Progressive – as income goes up, % of tax goes up (income tax)
Regressive – as income goes up, % of tax goes down (sales tax)

56
Q

What are the two FICA taxes?

A

Social Security and Medicare

57
Q

Gross Pay

A

Gross Pay – pay before anything is taken out

58
Q

Net Pay

A

Net Pay – pay after taxes and deductions are taken out

59
Q

What type of tax is the Social Security tax? The Medicare tax?

A

Social security is a proportional tax up to the cap of $106,800; regressive after the cap.
Medicare is a proportional tax.

60
Q

Why is Social Security collected? Medicare?

A

Social security is for living expenses during retirement.
Medicare is for healthcare during retirement.

61
Q

Gross Domestic Product

A

All final goods / services
Made in a year
In a nation’s borders

62
Q

Output Expenditure Model

A

GDP = C + I + G + (X – M)

63
Q

Recession/ Contraction

A

Real GDP is decreasing (peak to trough)

64
Q

Recovery/Expansion

A

Real GDP is increasing (trough to peak)

65
Q

Inflation

A

General increase in prices; decreases purchasing power and devalues the dollar.

66
Q

Definition of Unemployment

A

Someone looking for a job but cannot find one.

67
Q

Three Types of Unemployment

A

Frictional – looking for first job or between jobs
Structural – one’s skills are not valuable to an employer
Cyclical – unemployment due to recession

68
Q

What are the tools of Expansionary Fiscal Policy?

A

Decrease taxes
or
Increase government spending

69
Q

What are the tools of Contractionary Fiscal Policy?

A

Increase taxes
or
Decrease government spending

70
Q

Expansionary Fiscal Policy fixes what problem?

A

Unemployment

71
Q

Contractionary Fiscal Policy fixes what problem?

A

Inflation

72
Q

Expansionary Fiscal Policy causes what problem?

A

Inflation

73
Q

Contractionary Fiscal Policy causes what problem?

A

Unemployment

74
Q

Fiscal Policy causes which curve to shift?

A

Aggregate Demand

75
Q

Stagflation

A

Real GDP goes down and price level goes up.

76
Q

Three Functions of Money

A

Medium of Exchange
Measure of Value
Store of Value

77
Q

Three Main Branches of the Fed

A

Board of Governors – heads the Fed
Federal Advisory Council – provides advice for the BOG
Federal Open Market Committee – decides monetary policy

78
Q

Three Tools of Expansionary Monetary Policy

A

Expansionary Monetary Policy:
Decrease required reserves
Decrease discount rate
Buy bonds/securities

79
Q

Three Tools of Contractionary Monetary Policy

A

Contractionary Monetary Policy:
Increase required reserves
Increase discount rate
Sell bonds/securities

80
Q

Expansionary Monetary Policy fixes…
and causes…

A

Fixes unemployment but causes inflation.

81
Q

Contractionary Monetary Policy fixes…
and causes…

A

Fixes inflation but causes unemployment.

82
Q

Absolute Advantage

A

Absolute Advantage – can make more of a product or can produce the same amount using less resources

83
Q

Comparative Advantage

A

Comparative Advantage – can produce at a lower opportunity cost

84
Q

The Five Major Barriers to Trade

A

Protective tariff – tax on an import that causes the domestic consumer to switch to the domestic product
Revenue tariff – tax that does not make the domestic consumer switch to the domestic product
Quota – limit on the # of foreign goods allowed in the country.
Subsidy – the government helps the domestic producer pay for production.
Embargo – ban on trade with a particular country

85
Q

Foreign Exchange

A

Foreign Exchange – purchasing foreign currency

86
Q

Foreign Exchange Rate Equation

A

Cost of the item in the old currency
How much of the old currency it takes to buy 1 of the new

87
Q

Appreciation

A

Appreciation – when a currency buys more of a foreign currency

88
Q

Depreciation

A

Depreciation – when a currency buys less of a foreign currency

89
Q

Trade Deficit

A

Trade Deficit: Exports < Imports

90
Q

Trade Surplus

A

Trade Surplus: Exports > Imports

91
Q

A strong dollar leads to a …

A

…trade deficit

92
Q

A week dollar leads to a …

A

…trade surplus

93
Q

Commercial Bank

A

Commercial Bank – for-profit bank

94
Q

Credit Union

A

Credit Union – run like a bank but is nonprofit

95
Q

Principal

A

The original amount of the loan or investment; it’s what you earn/pay interest on.

96
Q

Simple Interest

A

Simple Interest – interest is earned/charged only on the principal

97
Q

Compound Interest

A

Compound Interest – interest is earned/charged on the principal and on the interest previously earned/charged

98
Q

Payday loans

A

Short term loan with high interest usually borrowing against your next paycheck. For people with bad credit, no bank account etc.

99
Q

Title Pawn Loans

A

Secured loan using the title of your car.

100
Q

How do we pay for things

A

Cash, credit, debit, pre-paid

101
Q

Three Rules for Investing

A

Start early.
Buy and hold.
Diversify.

102
Q

Six Types of Investment
(from least risky to most risky)

A

Least to Most Risky:
Savings Account
Certificate of Deposit
Bond – loan to the government or a corporation
Stocks
Mutual Funds – package of a variety of investments
Real Estate – the purchase of land / buildings

103
Q

Five Major Types of Credit

A

Car Loans
Student Loans
Home Loans (Mortgages)
Personal Loans
Credit Cards

104
Q

Six Major Types of Insurance

A

Health
Car
Life
Homeowner’s
Disability
Renter’s

105
Q

Premium

A

Premium – regular payment to have insurance

106
Q

Deductible

A

Deductible – what you must pay before the insurance company will pay (when the accident occurs)

107
Q

Better Business Bureau

A

Handles complaints related to consumer purchases

108
Q

Steps in Consumer Complaints

A
  1. Contact the business 2. Leave a review 3. Contact owner or corporate office 4. Contact BBB
109
Q

5 Major Pieces of Consumer Protection Laws (know them)

A

Truth in Lending Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Equal Housing Act, Dodd-Frank Act

110
Q

Phishing

A

Email ploy to “fish” for your information

111
Q

Data breach

A

Can expose your sensitive information through several different means

112
Q

Skimming

A

Steals your credit card information by adding a device to gas pumps or ATM machines.

113
Q

Ponzi Schemes

A

Investment scams that offer very high returns with very little risk.

114
Q

Pump and Dump

A

Types of speculative investments like stocks and cryptocurrency. GameStop and AMC

115
Q

Advanced Fee Scheme

A

Contact you out of the blue with winnings, inheritance promising large sums of money for a fee.

116
Q

Ways to protect yourself from Identity theft

A

Freeze your credit, regularly change passwords, monitor your credit report, use secure networks, shredding, etc.

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