Short Answer Flashcards
What was the major economic goal of European countries for the 1500s to the 1700s ?
To increase their holdings of gold and silver
Name 3 economic systems, and for each one answer who owns the factors of production ? And who answers the three key economic questions ?
Radical capitalism- individuals own factors or production, individuals
Classic liberal capitalism- individuals own factors of production with minimal government decision making
State capitalism- individuals with moderate government ownership, individuals with moderate government decision making
According to Adam smith, what are the two keys to the economic prosperity of a nation ?
Limited government and Personal responsibility
Name two economic principles of capitalism supported by scripture and give a reference for each
Private ownership of property- Acts 5:4
Principle of individual accountability- Luke 12:47-48
According to Adam Smith, what were two flaws in mercantilist economic policy?
The nation would exploit its resources to accumulate gold and silver at the expense of its own people; aggressive actions of mercantilist nations would create enemies
What are three advantages of a sole proprietorship ?
Freedom to retain info
Freedom from outside control
Freedom from being an employee
What are the disadvantages of partnership ?
Unlimited personal financial liability
Uncertain life
Potential conflict between partners
What are the three advantages of incorporation ?
Continuous life
Ease in raising financial capital
Limited personal financial liability
An LLC combines the benefits of which two forms of business ownership ?
Partnership and corporation
According to the law, what is a corporation, and what are it’s important properties ?
It’s an artificial being, invisible, intangible, and existing only in the contemplation of the law. It’s important properties are immorality and individuality
List three reasons that stock markets are important to the economy
The rookie place is where corporations can raise needed revenue; provide opportunities for individuals to invest; they provide valuable info concerning the state of the state of the nations economy
Identify each of the following as being associated with common (C) or preferred (P) shares of stock: A. Shareholders receive dividends first. ____, B. Owners have voting rights. ____, C. Considered true ownership. ____
P, C, C
When and why was the SEC founded ?
Founded following the Great Depression to protect investors by regulating brokers and exchanges and ensuring that corporations provide accurate and current info to the public
In what two ways is a stock market like other markets ?
It is s location where those who wish to buy and sell come together and the price of its products reflects what consumers are willing to pay
Owning shares of stock not only makes a person a partial owner of a corporation but also gives that person what other opportunity ?
The opportunity to vote on business decisions proposed by the board of directors
