Unit 1 Flashcards
Who said, “Economics is a study of mankind in the ordinary business of life”?
Alfred Marshall
What is the Greek word from which we get the word economics?
Oikonomos
What is the meaning of the Greek word from which we get the word economics?
to be a Steward
In previous generations, the word economy primarily referred to the management of what?
a household
What are some jobs that economists do?
- teach in universities
- work for investment cos.
- write books/give speeches
- hold government positions
How does Mirriam Websters eleventh collegiate dictionary define economics?
A social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services
According to Mirriam Webster, an economy is the structure or conditions of economic life in what?
a country, area, or period
what kind of science is economics?
social
what kind of behavior does economics study?
human
What is one development which causes the people of a simple society to become economically interdependant?
the specialization of labor
What is the principle of opportunity cost?
The real cost of doing one thing includes the cost of not doing or making something else
What is created when people specialize in certain efforts and offer their goods and services to others for a price?
a market
Why does the law of supply and demand work?
because of the power of prices
In American society, what is used as the medium of exchange?
money
Money once took the form of what?
beads, shells, gold, silver, and paper certificates
What does Leonard Read mean when he says that “not a single person on the face of the earth knows how to make a pencil”?
He means that it takes millions of people to make a pencil; not just one.
What is the mystery of how the pencil was created?
there is no human mastermind behind it, instead the Invisible Hand is at work
What is the main lesson that Read wants to make in this essay?
to leave all creative energies uninhibited and create and economy that will provide what people want and need.
A group of workers who organize themselves and negotiate with business owners for higher wages and benefits is called what?
A labor union
Why do many American companies prefer to have their products made overseas?
because it is cheaper
What are some examples of how a country at war can negatively affect trade?
- workers have to go fight
- they might have to leave the country or be killed
- factories and farmland are destroyed
- trade is disrupted
describe capitalism
Economic system in which the means of production are owned by individuals
Describe socialism
economic system in which means of production are owned by the state (or national government)
What are some examples of institutions that help the working of the economy?
- banks
- financial establishments
- corporations
- labor unions
- legal system
Name 2 businesses that the government has created
Amtrak and Tennessee Valley Authority
What term is used to describe economic effects external to the direct production of goods?
Externalities
What is the meaning of the term gross domestic income?
It is a measure of the value of all the finished goods and services produced within a country
What is the difference between macroeconomics and microeconomics?
macroeconomics looks at the big picture of economics - the national economy and microeconomics looks at the small picture of economics - households and companies.
Who is often called the father of modern economics?
Adam Smith
In what country was Adam Smith born?
Scotland
What book by Adam Smith was published in 1776?
The Wealth of Nations
How did Smith challenge the prevailing view of how nations build and acquire wealth?
He said that the wealth came from the labor that the citizens provided
Where was Karl Marx born?
Trier, Prussia
What two classes of society did Marx acknowledge?
The proletariat (working class) and the bourgeoisie (ownership class)
Describe Marx’s theory for the establishment of a socialist state
The state would be run by the intellectually elite on behalf of the working class. The workers would own the means of production and share in the profit
What 2 circumstances does Smith say regulate the proportion of what a nation produces to the number of those who consume it?
The skill, dexterity, and judgment with which it’s labor is applied and the proportion between the number of those who are employed in useful labor and those who are not employed
What dos Smith say brought about the biggest improvement in the productive powers of labor?
The division of labor
Smith says that we obtain what we need not from the ______ of the merchants, bur from their regard to their own ________.
Benevolence, interest
What is seen as the starting point of the influence of the Austrian School of Economics?
The Principles of Economics by Carl Menger
What events vindicated Ludwig von Mises’s belief that the absence of competition in a free market would make a socialist system workable?
the downfall of the Soviet Union and Eastern European communist countries
Name 2 world leaders who were influenced by The Road to Serfdom
U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher
Who is considered the Father of modern study of macroeconomics?
John Maynard Keynes
In the General Theory of Employment, Interest, and Money what kind of government action did John Maynard Keynes advocate to stimulate demand in times of emergency?
Deficit spending and funding of public works
IN his 1981 inaugural address, Ronald Reagan said that government is what?
Not the solution, but the problem
Milton Friedman believed that the Great Depression was primarily caused by what?
Failure of the Federal Reserve System to maintain an adequate supply of money to help the economy grow
What 4 U.S. Presidents did John Kenneth Galbraith serve?
Franklin Roosevelt, John Kennedy, Harry Truman, Lyndon Johnson
What work popularized the term “conventional wisdom”?
The Affluent Society by John Kenneth Galbraith
Who was the chairman of the council of Economic advisors from 2003 to 2005?
George Mankiw
