Unit 2: economics Flashcards
Role of government in market economies
The government does not control vita resources, valuable goods, or any other major segments of the economy.
Supply-demand-price relationship
Prices determined by the interaction of supply and demand. When demand is HUGH & supply is LOW, price is HIGH. When demand is LOW & supply is HIGH, price is LOW
what is mercantilism
an economic theory that says the aim of all economic pursuits should be to strengthen the power and wealth of the state
Bullionism
economic health of a nation could be measured by the amount of precious metal (gold & silver ) which it possessed
Competition
Provides consumers with a wide range of choices; business compete to offer better products, lower prices or superior services to attract consumers
Four main economic questions
- What goods and services should be produced?
- How are goods and services to be produced?
- Who will consume the goods and services produced?
- How much should be produced?
Neo-liberalism
both supply side & monetarism reflect a return to the principles of more classical liberalism through laissez-faire policies. Lower income tax rates & lower capital borrowing rates, looser business regulations.
Scarcity
Shortage- quantity demand exceeds the quantity supplied
Surplus
quantity supplied exceeds the quantity demanded
The Industrial Revolution
A revolution in Britain and US that lead to many mechanical developments like steam power and also helped create a more industrialized society
The Invisible hand
Suggests that markets are self-regulation
Laissez-faire
Governments interfere minimally with the free & efficient workings of the market
Bourgeoisie
The capitalist class, owners of the means of productions
proletariat
The working class, those who sell their labour as service
Karl Marx
Was a German political philosopher and revolutionary. Hated the conditions that the Industrial Revolution had brought to workers. With Friedrich Engels, he confounded scientific socialism (modern communism).
The Communist Manifesto
Created by Friedrich Engels with Marx. Outlined many of the core components of modern communists.
Forced collectivization
The Soviet union collected all the agricultural products from the farms. Resistance to said collectivisation led to starvation. an economic policy where all land is taken away from private owners and combined in large, collectively worked farms
Five Year Plans
One major goal of Stalin’s was the rapid industrialisation of the Soviet Union. He initiated a series of comprehensive economic plans known as Five Year Plans. Replacement of NEP
Free market economy
Economy found in the middle of the spectrum, includes government involvement in economic decision making but still maintains a citizens individual freedom
Capitalism
an economic system based on free markets, fair competition, wise consumers, and profit-motivated producers; a minimum of government involvement is favoured
Marxist dialectic
Society evolves through a series of economic stages called Marxist Dialect; 1. Primitive communism 2. Feudalism 3.Capitalism 4. Socialism 5. Communism (Marxism)
Marxism
A radical form of socialism, often called scientific socialism or communism to distinguish it from other socialist ideologies
Reaganomics
The federal economic polices of the Reagan administration, elected in 1981. These policies combined a monetarist fiscal policy, supply-side tax cuts, and domestic budget cutting. Their goal was to reduce the size of the federal government and stimulate economic growth.
Vladimir Lenin
started a communist party in Russia called the Bolshevik party. Introduced War communism and New Economic Policy (NEP) though he described the NEP as a “strategic retreat” as it was based in capitalist ideologies.
Stalin
came to power after Lenin, despite Lenin’s warnings about Stalin. It became more of a dictatorship. Introduced Five Year Plans and Collectivization into the Soviet Union
New Deal
economic policies put in place by the US president Roosevelt in 1933. The policies gave government a more significant role in the regulation of the economy and in providing social “safety net” programs
Monopolies
the exclusive ownership or control of trade in a particular good/service
Mixed economies
Mixture of a market and combined economy. Market is more or less government free, except for key areas. Rise in government power, and less flexible.
Supply side economics/Hayek
An economic philosophy that holds the sharply cutting taxes will increase the incentive people have to work, save, and invest. Greater investments will lead to more jobs, a more productive economy, and more tax revenues for the government.
Fiscal policy
how the governement spends and uses taxes; Government policy that attempts to manage the economy by controlling taxing and spending.
Monetary policy
Government policy that attempts to manage the economy by controlling the money supply through money printing and interest rates; changing the interest rates on loans to encourage/discourage borrowing money
Communism
a system of society with the property vesting in the community and each member working for the common benefit according to his/her capacity and receiving according to his/her needs
Collectivism in economics
a current of thinking that values the goals of the group and the common good over the goals of any one individual
Individualism in economics
a current of thinking that values the freedom and worth of the individual, sometimes over the security and harmony of the group
Demand side economics/Keynes
the idea that government spending and tax cuts help an economy by raising demand
Keynsian Economics
the idea that governments can manipulate macroeconomic demand through taxation and spending policies in order to foster stable growth
mixed economy
An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.
New Deal
The name of President Roosevelt’s program for getting the United States out of the depression. Implemented demand side economics
deficit financing
practice of funding government by borrowing to make up the difference between government spending and revenue
Progressivism
movement that responded to the pressures of industrialization and urbanization by promoting reforms
Progressive taxation
the tax as a percentage of income increases as income increases
Tarriffs
tax on imports/exports
Union
A worker association that bargains with employers over wages, benefits, and working conditions
Welfare Capitalism
an economic and political system that combines a mostly market-based economy with extensive social welfare programs
F.D. Roosevelt
Implemented the new deal and got the U.S. out of the great depression
J.M. Keynes
English economist with theory that a country should spend more during a recession to reboost economy
He says consumption depends on current income and is in a positive linear relationship with GDP
Theodore Roosevelt
Implemented the square deal
Square Deal
Theodore Roosevelt’s domestic program, which reflected his three major goals: conservation of natural resources, control of corporations, and consumer protection. These three demands are often referred to as the “three Cs” of Roosevelt’s Square Deal.
Deregulation
The lifting of government restrictions on business, industry, and professional activities.
Flat Rate Taxes
Indirect taxes which are of a fixed amount, rather than a percentage of the sales price. For example a $3 per pack tax on cigarettes. It would be $3 whether the sales price is $2 or $5.
Monetarism
A theory that government should control the money supply to encourage economic growth and restrain inflation.
Neoconservatism
Rebirth of classical ideologies
Stagflation
a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
Milton Friedman
(1912-2006) American economist. Conservative thinker famous for his advocacy of monetarism (an revision of the quantity theory of money). he is strongly associated with the ideals of laissez-faire government policy.
Ronald Reagan
introduced neoconservative to US
Ralph Klein
Introduced neoconservatism to Alberta
