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Economy > Test 1 > Flashcards

Test 1 Flashcards

0
Q

Macroeconomics

A

Study of the economy as a whole or a major subdivision

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1
Q

Economics

A

The study of the allocation of scarce resources among unlimited wants

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2
Q

Microeconomics

A

The behavior of individual businesses or individual consumers as they decide how best to use available resources

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3
Q

What is the major economic problem

A

Scarcity

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4
Q

10 principles of economics

A
  1. People face trade offs
  2. The cost of something is what you give up to get it
  3. Rational people think at the margin
  4. People respond to incentives
  5. Trade can make everyone better off
  6. Markets are usually a good way to organize economic activity
  7. Governments can sometimes improve market outcomes
  8. A country’s standard of living depends on its ability to produce goods and services
  9. Prices rise when the government prints more money
  10. Society faces a short run trade off between inflation and unemployment
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5
Q

5 Factors of Production

A
  1. Land
  2. Labor
  3. Capital
  4. Entrepreneurship
  5. Technology
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6
Q

Land

A

All natural resources

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7
Q

Labor

A

All human inputs into production with the exception of entrepreneurship

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8
Q

Capital

A

All man made aids of production

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9
Q

Entrepreneurship

A

When a person takes the initiative to organize the factors of production and bears the risk and earns the profits or the losses

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10
Q

Technology

A

The knowledge of how best to use the other factors of production

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11
Q

4 Basic Economic Questions

A
  1. What should be produced?
  2. How much should be produced?
  3. What methods should be used?
  4. How should goods and services be distributed
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12
Q

Circular Flow Diagram

A

A visual model of the economy that shows how money flows through markets among households and businesses

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13
Q

Adam Smith

A

Wealth of Nations

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14
Q

Market System Foundations

A
  1. Private Property
  2. Choice/Economic Freedom
  3. Voluntary Exchange
  4. Pure Competition
  5. Economic Incentives
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15
Q

Private Property

A

Owned by individual/business

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16
Q

Choice/Economic Freedom

A

People can make choices in their own best interest

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17
Q

Voluntary Exchange

A

Trade where both buyer and seller must feel that they will both benefit from item of trade

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18
Q

Pure Competition

A

Industry with plenty of businesses, no one business is dominant

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19
Q

Economic Incentives

A

Positive and negative stimuli that guide resources into the production of goods and services that people want most

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20
Q

Opportunity Cost

A

Whatever must be given up to obtain something

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21
Q

2 Things That Can Have a Great Effect On Economy

A
  1. Change in resources

2. Change in technology

22
Q

Command Economy

A

An economic system where the government makes most of the economic decisions

23
Q

Market Economy

A

Based on private ownership, property, competition, and the profit motif

24
Q

Traditional Economy

A

Custom and tradition are used to answer economic questions

25
Q

What is the role of government in the free enterprise system?

A
  1. Safe guards the market system through anti-trust laws
  2. Provide public goods and services (roads, police,etc.)
  3. Deal with externalities (pollution,etc.)
  4. Assist those in need
  5. Help specific groups
  6. Stabilize the economy
26
Q

World Economic Systems

A
  1. Capitalism
  2. Socialism
  3. Communism
27
Q

Socialism

A

An economic system where the government owns part of the means of production

28
Q

What are the goals of Socialism?

A
  1. The redistribution of wealth

2. Protection from low wages (Minimum wage laws)

29
Q

Communism

A

The government owns all of the means of production
Based on the idea of Economic Determinism
Dictatorship of the proletariat

30
Q

Economic Determinism

A

Everything is determined by economics

31
Q

Goal of Communism

A

Creation of a classless society

32
Q

Karl Marx

A

Published Communist Manifesto

33
Q

Karl Marx and Frederich Engles

A

Published Capital

34
Q

Bourgeoisie

A

Middle and Upper Class

35
Q

Proletariat

A

Lower Class

36
Q

Russian Communism begins with what

A

The Revolution of 1917

37
Q

Who led the Revolution of 1917

A

Vladimir Lenin and the Bolsheviks

38
Q

What did War Communism do?

A
  1. Abolish private property (Confiscate property of the wealthy and gave it to peasants)
  2. Government took over all of the companies
  3. Forced workers to relocate
  4. Confiscated food from farmer to feed people in the city and the army
39
Q

Lenin introduces the NEP which stands for what

A

New Economic Policy

40
Q

Who followed after the death of Vladimir Lenin?

A

Joseph Stalin

41
Q

What does Stalin start?

A

Central Planning

42
Q

What is Central Planning?

A

The government plans the economy

43
Q

5 Year Planning

A

They emphasize parts of the economy for 5 years at a time

44
Q

What do they focus on for the first 5 years?

A

Heavy Industry and Collective Farms

45
Q

What happened with Central Planning?

A

Industry increased but farms failed because there was a lack of necessity (people didn’t care enough)
There was a shortage of the smaller things

46
Q

Chinese Communist Leader

A

Mao Zedong

47
Q

What are the rules of Chinese Communism?

A
  1. Abolished private property

2. Followed a 5 Year Plan

48
Q

Chinese 5 year plan

A

Focus on Heavy Industry

49
Q

Chinese Cultural Revolution

A

Violent movement that

  1. Killed royal families
  2. Destroyed temples, libraries, etc.
  3. Sent people to re-education camps
50
Q

Who began the 4 Modernizations

A

Deng Xiaoping (followed after Mao Zedong’s death)

51
Q

Chinese start introducing what?

A

Capitalism and encouraged Foreign Investments

52
Q

How will they accomplish the 4 Modernizations

A

Sent their people to American and Canadian education systems to learn and modernize their own country

Economy (8 decks)

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