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Economics > Final S1 > Flashcards

Final S1 Flashcards

0
Q

4 questions each economy must answer

A
  1. What and how much should be produced?
  2. Who should produce what?
  3. How should goods/services be produced?
  4. Who should share in what is produced?
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1
Q

3 factors that affect quantity demanded

A
  1. The necessity of the item - how essential is the good/service?
  2. Real income effect - amount of goods/services you can buy ($)
  3. Substitution effect - substituting a comparable product at a cheaper price
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2
Q

Adam Smith

A

Founder of market economies who theorized that an invisible hand would protect a capitalist economy

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3
Q

Aggregate supply and demand

A

The total amount of goods/services supplied and demanded

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4
Q

Annual percentage rate (APR)

A

Cost of credit expressed as a yearly percentage that includes all costs of borrowed money.
Shows all hidden expenses

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5
Q

Bonds

A

Certificate issues by a company or the govt in exchange for borrowed funds with the promise to pay a stated rate of interest for a given period of time

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6
Q

Bait and switch

A

Deceptive advertising practice in which a store attracts customers with offering a product at a low price, then tries to sell a similar product but at a higher price

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7
Q

Certificates of deposit (CD’s)

A

Time deposits that state the amount of the deposit, maturity date and the rate of interest being paid

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8
Q

Changes in supply

- Based on 3 factors

A

A shift in the entire curve based on a change in supply at the same price

  1. Cost of production
  2. Effects of technology
  3. Entrance/Exit of competition
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9
Q

Brand name

A

Word, picture, or logo on a product that helps customers tell it from similar products of competitors

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10
Q

Collateral

A

Something of value that a person uses as a promise to repay a loan

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11
Q

Comparison shopping

A

Getting info about types and prices of products from various stores or companies

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12
Q

Consumer price index (CPI)

A

A statistical measure of the average of prices of a specified set of goods/services purchases by typical consumers in city areas

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13
Q

Inflation

- 2 main causes

A

Prolonged rise in the general price level of final goods/services because there is too much $ in the economy

  1. Demand pull inflation
  2. Cost push inflation
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14
Q

Demand pull inflation

A

Theory that prices rise as the result of excessive business and consumer demand; demand increases faster than total supply, resulting in shortages that lead to higher prices

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15
Q

Cost push inflation

A

Theory that higher wages push up prices

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16
Q

Fixed expenses

A

Payments that must be made that are relatively consistent over time (rent, mortgage, insurance etc)

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17
Q

Flexible expenses

A

Payments that must be made that may vary greatly from month to month

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18
Q

Credit rating

A

Rating of the risk involved in lending money to an individual or business

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19
Q

Credit union

A

Depository institution owned and operated by its members to provide savings accounts and low-interest loans to its members only

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20
Q

Debit card

A

Credit card that acts like a checking account (your $)

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21
Q

Disposable income

A

Income remaining for a person to spend or save after all taxes have been paid

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22
Q

Discretionary income

A

Money income a person has left to spend on extras after necessities have been bought

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23
Q

Electronic funds transfer act of 1978

A

If your credit card is stolen you are only responsible for $50 of the debt

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24
Q

John Maynard Keynes

A

Single handedly created the deficit. Said it is ok to spend money when your people are in need

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25
Q

Discount rate

A

The interest rate that the Fed charges on loans to banks

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26
Q

Budget debt

A

The summation of all governments past deficits and surpluses

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27
Q

Budget deficit

A

Whenever the govt spends more than it collects for a given year

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28
Q

Credit

A

Receiving of money either directly or indirectly to buy goods and services in the present with the promise to pay for them in the future

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29
Q

Principal

A

Amount of money borrowed in a loan

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30
Q

Loan

A

Lending of money that will be payed back with interest

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31
Q

Installment debt

A

Repayment of a debt divided into equal amounts or installments over a period of time

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32
Q

Finance companies

A

Company that takes over contracts for installment debt from from stores and adds a fee for collecting the debt; also makes loans directly to consumers

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33
Q

Regular change account

A

Also known as a 30 day charge; no interest is charged but the entire bill is due at that time. (Ex: gas cards)

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34
Q

Credit card

A

Card used to create an agreement that allows a person to make purchases without paying cash

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35
Q

Revolving charge account

A

Agreement that allows a person to make purchases without paying cash. Purchases may be paid off gradually but interest is charged on the unpaid balance (ex: department store cards)

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36
Q

Refinance

A

To satisfy a debt by making another loan with new terms

37
Q

Installment charge account

A

Agreement that allows a person to make purchases without paying cash for major items to be paid through equal payments/installments over a period of time with use of a credit card

38
Q

Command economy

A

System in which the government controls the factors of production and makes all decisions about their use

39
Q

Consumer decision making checklist (4 items)

A
  1. Do I really need this item?
  2. Is this good/service worth the time I spent earning the income to pay for it? (worth the price)
  3. Is there any better use for my income right now? Save $?
  4. Do I want high, medium, or low quality?
40
Q

5 Consumer rights

A
  1. The right to safety
  2. The right to be informed
  3. The right to choose
  4. The right to be heard
  5. The right to redress (complain)
41
Q

Cyclical unemployment

A

Unemployment associated with the fluctuations in the business cycle

42
Q

Diversification

A

Spreading investment over several different types to lower risk

43
Q

Market economy (ie: capitalism)

A

System in which individuals own the factors of production and have the right to use those resources in any way within the limits of the law

44
Q

Want

A

Anything other than what is needed to survive

45
Q

Need

A

Basics required to survive

46
Q

Value

A

Beliefs or characteristics that a person or group considers important

47
Q

Economics

A

The study of how people make choices about ways to use limited resources to fulfill their wants

48
Q

Factors of production

A

Resources of land, labor, capital and entrepreneurship used to produce goods/services

49
Q

5 factors of production

A
  1. Land
  2. Labor
  3. Capital
  4. Entrepreneurship
  5. Technology
50
Q

Economy

A

The production and distribution of goods/services in a society

51
Q

Scarcity

A

Basic economic problem that results from a combination of limited resources and unlimited wants

52
Q

Goods

A

Tangible objects that can satisfy peoples wants or needs

53
Q

Services

A

Action that can satisfy peoples wants or needs

54
Q

Opportunity cost

A

Value of next best alternative given up for what’s chosen

55
Q

Elastic and inelastic demand (ie: price elasticity of demand)

A

Responsiveness to changes

  • Elastic: demand changes substantially
  • Inelastic: demand changes unsubstantially (necessity such as gas, milk, and have no substitute)
56
Q

Equilibrium

A

Point at which supply and demand meet

57
Q

Fiscal policy

A

Federal govts use of taxation and spending policies to affect overall business activity

58
Q

Fractional reserve banking system

A

System in which only a fraction of deposits are kept in hand (in reserve)
- used by the Fed

59
Q

Law of supply

A

At higher profits, a larger quantity of a given item will be produced and vice versa

60
Q

Law of demand

A

As price increases, quantity demanded decreases and visa versa

61
Q

Loose monetary policy

A

Designed to stimulate the economy by making credit available and abundant
- instituted by the Fed

62
Q

Tight monetary policy

A

Designed to slow the economy by making credit expensive and scarce (used to curb inflation and rapid growth)
- instituted by the Fed

63
Q

Supply side economics

A

Advocate reductions in tax rates to stimulate private investment and employment

  • heavily endorsed by republicans
  • democrats endorse demand side economics
64
Q

Monetary policy

A

Used to regulate the supply of money in the economy (Affects value, credit, and business activity)

65
Q

Quantity demanded

A

Amount of demand based on price (identified along the same demand curve)

66
Q

Change in demand

A

A shift in the entire curve based on change in demand at the same price

67
Q

3 factors that affect changes in demand

A
  1. Change in income
  2. Tastes and preference
  3. Related goods - substitute and complementary
68
Q

Recession

A

Part of business cycle in which the nations out put (real GDP) declines for at least 6 months

69
Q

The Federal Reserve Banking System (the fed)

A

Also known as the centralized bank of the US.
It’s job:
1. To be the govt bank
2. Manages the flow and circulation of money in the economy
3. Provide confidence in people (prevents runs and panics)
4. Provides emergency $ to banks
5. Supervise and regulate other banks

70
Q

Unemployment rate

A

The percentage of civilian labor force that is without jobs but is actively looking for work

71
Q

Mutual Funds

A

Investment fund that pool stocks, bonds, and/or other investments (Basket of stuff) (Safer risk/ more conservative than stocks)

72
Q

NASDAQ

A

It is a system for selling stocks electronically

National association of securities dealers automated quotations

73
Q

Unsecured loan

A

Loan not guaranteed by anything other than the promise to repay it

74
Q

Stock

A

Share of ownership in a company

75
Q

Stock market indexes

A

Measure of what is happening to a given set of stocks for a specified list of companies

76
Q

Informative advertising

A

Advertising that gives info about a product

77
Q

The Dow Jones Industrial averages (the Dow)

A

A group of 30 selected companies whose stock values are averaged to give a general sense of the overall stock market performance

78
Q

5 basic elements of Marxism

A
  1. History is governed by economics
  2. There is always an inevitable conflict between the exploited (working class) and the exploiting (ruling class)
  3. The bourgeoisie (ruling class) are doomed to be overthrown by the proletariat (working class)
  4. Socialism follows and wealth is redistributed equally
  5. Finally, the state itself will be unnecessary and wither away, giving way to the final state: Communism (political, social, and economic equality)
79
Q

Surplus

A

Greater amount supplied than demanded of a product (occurs about equilibrium)

80
Q

Shortage

A

Greater amount demanded than supplied of a product (occurs bow equilibrium)

81
Q

Credit risk

A

The risk involved in lending someone money

82
Q

Good credit risk

A

Good risk is exhibited when someone keeps the same job for a while, pays on time, etc

83
Q

GDP

A

The sum of all the products made in one year to show the overall profit in a year

84
Q

Pure economic systems

A

There is no such thing

85
Q

Trade off

A

Trade something for another. (Ex: money for food, sleep for being on time)

86
Q

Land

A

Natural resources and surface land and water

87
Q

Labor

A

Human effort directed toward producing goods/services

88
Q

Capital

A

Previously manufactured goods used to make other goods/services ($)

89
Q

Entrepreneurship

A

When individuals take risks to develop new products and start new businesses in order to make profits

90
Q

Technology

A

The use of science to develop new products and new methods for producing and distributing goods/services

Economics (4 decks)

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