Test 6 economics Flashcards
The human desire to have and use a certain good
Want
The study of the choices that individuals and societies make in the production, distribution, and consumption of goods.
Economics
Microeconomics
A tangible item that people want and for which they will pay
Good
Intangible goods produced by labor for which people expect to pay
Service
The quantity of a good for sale at a certain price under certain conditions or simply the amount of a good that is produced
Supply
The amount of a good that is bought at a certain price under certain conditions
Demand
First thing to understand about economics
Everything has to be worked for
People who work to provide goods
Producer
Those who use goods
Consumers
Anything used in the production and distribution of goods and services
Capital
What type of good is a computer?
It depends
2 things that determine value
Scarcity and utility
Worth that consumers attach to an item
Value
Diamond-water paradox
Carl Menger
Founder of the Austrian school of economics
Carl Menger
System built on the state treasury, national wealth, and based on silver and gold
Mercantilism
Tax on imported goods
Tariffs
Philosophy that says that a nation’s wealth is based in how it uses its land
Physiocracy
Very influential with the physiocrats
Samuel Du Pont
Means “hands off”
“Lissez-Faire”
Founder of modern economics
Adam Smith
What book did Adam Smith wrote?
“The Wealth of Nations”
The separation of work into individualized tasks
Division labour
Putting people in jobs they do best
Specialization
Who created the “invisible hand”?
Adam Smith
Economic success, or the condition of enjoying many goods, including services.
Prosperity
Goods can by produce only by certain amount of…?
Labour
Factors of production
- Natural Resources
- Labor
- Capital
- Entrepreneurship
- Information
System that makes it decisions based upon customs, heredity and cast
Traditional economy
A system in which a centralized authority determines the production and distribution of goods and services as well as things like savings, investments, and prices
Direct economy
Economic system that provides barely enough to keep a society alive
Subsistence economy
Anyone who owns producer goods or owns a share of some business that produces goods
Capitalist
Was Robinson Crusoe a capitalist?
Yes
Gunpowder Industry
E.I. Du Pont
Basic components of capitalism
Freedom of enterprise in a market environment
Limited government
Property rights
The relationship between a good’s price and the amount that people are willing to buy
Demand
As the relationship between a good’s price and the amount that producers are willing to provide for consumers
Supply
The two types of value
Value in use
Value in exchange
The amount of money that a buyer pays the seller for a particular item
Price
Phenomenon that states that as one’s supply of a specific good or service increases, the satisfaction derived from each additional unit tends to decrease
Diminishing marginal utility
The amount of satisfaction that results from a one-unit increase of a product, tends to become smaller with each additional unit
Marginal utility
When the price of a good falls, consumers tend to buy more of that good or of other items because they can do so without giving up anything
Income effect
Indicates that people tend to substitute less expensive goods for ones whose prices have risen
Substitution effect
What must be to something to be elastic
Substitutes
A list of numbers that compares price with quantity demanded
Demand schedule
To which direction does the demand row goes?
Down and to the right
A good whose demand is directly related to consumers’ incomes is called…
Normal good
Demand for these items decreases as consumers’ incomes increase, and vice versa
Inferior good
A good often used in conjunction with another
Complement
What affect quantity demanded?
Price
Point at which supply and demand meet
Equilibrium
Area above the equilibrium
Surplus
The availability of what? is the reason many goods are elastic
Substitutes
When governments place a limit on how high a producer may charge for his product, we call it…
Price ceiling
Price ceiling results in?
Shortage
Price levels set above the equilibrium prices
Price floors
What do we have along the vertical axis?
Price
Reasons why wages and salaries may not be equal
Experience
Advanced degrees
Geographical location
Productivity
Ways in which business get you to buy more
Bo go’s deal
Putting urgency on it
Amount of goods and services that a worker produces in an amount of time
Productivity
Wage employers will pay and workers will accept in an open competitive market
Market value
Signs that are used by consumers and producers to determine how much of a good to buy or sell at a given price and time
Market signals
Goods that have a life expectancy of less than three years
Nondurable goods
Illegal systems for exchanging goods
Black Markets
The reason that a person is willing to trade certain goods wether they are tangible items, or other goods.
Profit motive
The value of the best alternative that is foregone when a different alternative is taken
Opportunity cost
The wage that will cost people who run their own establishments to hire managers to manage their business for them
Wage of management
What makes possible a better standard of living in a prosperous society
Competition
The purest form of competition, also called pure competition
Perfect competition
How is known each firm in the market because it has no real control over the price it receives for its product- the firm takes whatever price it can get
Price taker
The situation that arises when a single firm is the only supplier of a good for which no substitute exists
Monopoly
Example of natural monopoly
Utility
Deodorant is a type of what industry?
Monopolistic competition
A market that occurs when an industry is dominated by only a few firms
Oligopoly
When all firms get together is called?
Collusion
One of the first and most important antitrust laws was the…
Sherman act
Act that outlawed several practices that were not specifically addressed in earlier laws
Clayton act
Force the consumer to buy a certain product before he can buy the product he really wants
Tying contract
Selling the same type of goods at different prices to different buyers
Price discrimination
The quality of producing effectively with a minimum of waste
Efficiency
The sum of all the factors of production used in making goods
Total cost
The sum cost of all the factors of production used in producing one unit of a good
Average cost
3 elements of the American mass production
Division of labour
Assembly line
Standardized parts
When specialization it is carried beyond the maximum efficiency
Overspecialization
The ability of one entity to produce goods or provide services more efficiently than his competitors when given the same resources
Absolute advantage
The ability of an entity to produce a good or provide a service at an opportunity cost that is lower than that of another producer
Comparative advantage
The production of goods in which a region has an absolute or a comparative advantage
Geographic specialization
Person who advocate of the principle of comparative advantage and talk about the risks of protectionism
David Ricardo
The theory that domestic manufacturers need government protection against foreign competitors
Protectionism
The commitment of resources to a project or purpose that is expected to bring future profit to the investor
Investment
What does RND stands for?
Research and development
Where did much of the capital of RND goes to
Insurance companies
One who borrows money or capital is a…?
Debtor
One who lends money or capital
Creditor
Check is what type of account?
Transaction account
An account that guarantees a certain interest rate and has a specified maturity date
CD account
An account that allows limited transactions and pays an interest rate that changes with the demand for loans
Money market account
The FDIC ensures your money until what amount?
$250,000
Payments to insurance companies
Premium
An arrangement provided by an individual’s employer for the intent of providing for the employee’s retirement from work
Pension plan
A legal entity which is distinct from the people who own it
Corporation
Shares of a corporation’s profit
Dividends
Safest form of investment
Bond
Investment companies that combine the resources of all their shareholders and invest the money in a wide variety of areas
Mutual funds
Assets that flow easily since they can be converted into other investments or cash without much time or difficulty
Liquid assessments
3 elements of investments
Amount invested, time, rate of return
Anything that is generally accepted as a means of payments
Money
The three purposes of money
- Be a medium of exchange
- Provide a measure of value
- Provide a store of value
The direct exchange of one good for another good without a standard form of money passing from hand to hand
Barter
Money slow to wear out
Durability
When money is easy to carry about
Portability
Coined metallic money
Specie
The idea that people will save forms of money that seem more stable and valuable and spend forms of money that seems less valuable; named after Sir Thomas Greshman’s observation that “bad money drives out good”
Gresham law
If prices decrease because money seems more valuable and stable
Deflation
A system which allows banks to hold less than 100 percent of deposits in reserve
Fractional Reserve Banking
Legal tender that is backed by nothing but a government’s promise
Fiat money
More narrowly defined type of money
M1
Agency that prints money
United States Department of the Treasury
The central banking network of the United States ultimately responsible for forming American monetary policy and for controlling the national money supply
Federal Reserve System
“Chicago school of ecomonics”, Monetarism
Milton Friedman
The theory that the variation in the money supply is the main source of economic fluctuations
Monetarism
An stablished system of political administration by which a nation, state, society, or organizations is ruled
Government
Year of the gold rush
1849
When was the gold discovered?
1848
In who’s mill?
John Sutter
President during the Louisiana purchase
Thomas Jefferson
Year of the Louisiana purchase
1803
An economic system based upon collective ownership and control of national resources
Socialism
Large, complex organizations made up of appointed officials and their numerous agencies and departments
Bureaucracies
Governmental practices which have harmed economic systems over centuries
- Excessive taxation
- Inflation and debasement of money
3.Excessive public expenditure
4.Excessive regulation and direction of the economy
- Political plundering of the economy
Who said “The government ought to confine activity to everything that is truly and properly public”
Edmund Burke
President who advocated the New Deal
T. Roosevelt
Who is the British economist who advocated “spending your way out of debt”
John Maynard Keynes
Criticism on the free market
Competition
Business cycle
Inflation
Highest point of the business cycle
Peak
After the peak it follows a
Recession
In a recession we spect to last no longer that how much?
2 months
The value of all finished goods and services produced within a country during a year’s time
Gross Domestic Product, GPD
The value of all finished goods and services produced by a nation’s citizens during a year’s time
Gross National Product, GNP
What immediately follows a through
Boom
Components of the economy that normally change before the rest of the economy
Leading indicators
Inflation that is caused when the demand becomes greater than the supply resulting in shortages
Demand-pull inflation
When a demand-pull inflation occurs, what happen?
There is a shortage
Inflation triggered when businesses face rising production costs, forcing them to increase the prices they charge for their goods
Cost-push inflation
Common tool to measure inflation
Consumer Price Index, CPI
Years of the base periods
1982-1984
Period that serves as a reference point to which prices are compared in the Consumer Price Index
Base period
Economic condition in which high inflation is combined with high unemployment, resulting in stagnation of productivity
Stagflation
President who popularise the idea of supply-side economics
Ronald Reagan
The theory that reduction of taxes makes more money available for private investment in capital and research, thereby increasing productivity.
Supply-side economics
Year for the Bolshevik revolution
1917
Economic system based upon public ownership and governmental control of the production and distribution of nearly all national resources
Communism
In which writing did Karl Marx established “In order to establish equality we must establish inequality”?
Dus Capital
Property owners
Burgeois
Common working class
Proletariat
“to each according to its abilities, to each according to its needs”
Karl Marx
Communism society lack what?
Competition
Names given by economists to the different socialistic economic systems
Welfare capitalism
Managed capitalism
Democratic socialism
Market socialism
When a government saves an organization from going to bankruptcy
Bail out
A philosophy which regards the entire world as one giant community that should be unified politically and economically
Globalism
One of the most prominent global bodies, created to maintain world peace
The United Nations, UN
How much countries are in the UN?
193
Permanent members on the security council
5
Problem with the general assembly vote
Equal voting regarding of population size
First established at the end of WWII to lend money to Japan and the countries of Wester Europe. Now it transformed into a type of international welfare agency that lends funds to some of the world’s poorest governments.
World bank
Institution of the World Bank that focuses on the world’s poorest countries
International Bank for Reconstruction and Development (IBRD)
Special agency linked to the UN created at the same time as the World Bank
International Monetary Fund (IMF)
Not an UN agency but cooperates with it. Is hailed as the only global body dealing with the trade rules that have been stablished among the world’s countries.
World Trade Organization (WTO)
This agreement called for the elimination of tariffs and other trade restrictions that existed between these countries to encourage free trade
North American Free Trade Agreement (NAFTA)
The UN has what currency?
Euro
The exclusive power of an independent state to rule and regulate internal affairs without foreign interference
National Sovereignty
Which agreement is better in a international trade?
Bilateral agreement
Organization that enforces the most favour policies
The WTO
Its said by the globalists that the …have the moral obligation to aid the Less developed countries (LDC)
Industrial Advance Countries (IAC)
Arguments of the globalists
Environment
One way of reducing global warming designed to require nations to buy allowances of “carbon credits” to decrease CO2 and reduce greenhouse emissions.
Kyoto Protocol
Prophet of Doom, published Essay on the Principle pf Population as It Affects the Future Improvement of Society
Thomas Robert Malthus
Incredibly clean form of energy
Nuclear energy
What represented the private sector
The goose
Material prosperity depends upon what?
Moral convictions and behavior
Quality work in an effective manner
Industriousness
The willingness to take risks, the strength to endure hard times, and the ability to hold out against the disappointment, harassment, ingratitude, and folly that may occur.
Fortitude
Idea that have people invest in me and pay investors with that.
Ponzi scheme
Two types of taxes
Direct taxes
Tax payed directly to the government
Direct taxes
Taxes payed by someone else responsability
Indirect taxes
Example of indirect tax
Sales tax
Which type of tax has the American government that says that the more you make, the more you are taxed
Progressive income tax
The amount of money that I owe
National debt
What is full employment
Those who are able and willing to get a job
Legal construct owed by stockholders
Corporation
Corporation of 100 shares
S corporation
