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U.S. Government > Economics Test 2 > Flashcards

Economics Test 2 Flashcards

1
Q

What are the 2 types of economics in the world today?

A
  • Microeconomics

- Macroeconomics

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2
Q

What is the study of individuals, families, and businesses in the economy?

A

Microeconomics ***

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3
Q

What is the study of the economy as a whole and is concerned with large-scale economic activity?

A

Macroeconomics ***

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4
Q

What studies economic behavior as it is?

A

Positive economics (factual)

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5
Q

What involves judgements of what economic behavior ought to be?

A

Normative economics (opinionated)

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6
Q

What is the way a society uses its scarce resources to satisfy its people’s unlimited wants?

A

An economic system **-*

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7
Q

What are the 3 basic types of economic systems?

A
  • Traditional economies
  • Command economies
  • Market economies
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8
Q

What is an economic system in which families, clans, or tribes make economic decisions based on customs and beliefs that have been handed down from generation to generation?

A

Traditional economy ***

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9
Q

What is the one goal of a traditional economy?

A

to survive

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10
Q

the government decides what goods and services will be produced, how they will be produced, and how they will be distributed?

A

A command economy ***

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11
Q

Government officials consider ______ and ______ of the country and allocate those resources according to their judgement.

A

resources and needs

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12
Q

What is based on choice, not government directives in this system, consumers and producers drive the economy?

A

Market economy ***

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13
Q

What do producers decide?

A

What goods/services they will offer

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14
Q

Individuals act in their own __________ when they make economic choices.

A

self-interest

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15
Q

U.S. Unemployment rate is 9%.

A

Positive economics

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16
Q

Higher interest rates will reduce house prices.

A

Positive economics

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17
Q

The U.S. unemployment rate should be lower.

A

Normative economics

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18
Q

Pollution is the most serious economic problem.

A

Normative economics

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19
Q

Who has had more influence than any other economist?

A

Adam Smith

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20
Q

Where was Smith born? What year?

A

Scotland

1723

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21
Q

What did Smith study, then later teach?

A

literature, logic and moral philosophy

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22
Q

In ____________, Smith challenged the ideas of mercantilism being economically sound.

A

Wealth of Nations

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23
Q

What is a system by which the government of the homeland controlled trade with its colonies?

A

Mercantilism

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24
Q

How would a nation become wealthier?

A

If it engaged in free trade

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25
Q

Smith reasoned that people behave in ways that satisfy __________.

A

Their economic self-interest

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26
Q

What guides the market place?

A

“invisible Hand”

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27
Q

What became the foundation of modern economic theory?

A

The “invisible hand” as well as other principals outlined in the Wealth of Nations

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28
Q

Government should provide basic healthcare to all citizens.

A

Normative Economics

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29
Q

Government-provided health care increases public expenditures.

A

Positive Economics

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30
Q

A fall in incomes will lead to a rise in demand for own-label supermarket foods.

A

Positive

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31
Q

A reduction in income tax will improve the incentives of the unemployed to find work.

A

Positive

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32
Q

Unemployment is more harmful than inflation.

A

Normative

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33
Q

What are 5 examples of Traditional Economies?

A
  • They clearly answer 3 economic questions
  • They produce what best ensures its survival
  • The methods of production are the same as they always been
  • System of distribution are determined by custom or tradition
  • Little disagreements over economic goods and roles
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34
Q

What are disadvantages of traditional economies?

A
  • Because they are based on ritual and customs, they resist change
  • they are less productive than they might be if they adopt new approaches
  • They prevent people from doing jobs they want to do or best suited to do
  • Very low standards of living
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35
Q

Modern societies that have adopted command economies have done so largely because of the influence of ________.

A

Karl Marx

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36
Q

Marx predicted that in time, the workers would overthrow this system and transfer ownership of the factories to _______ _____.

A

Public hand

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37
Q

What is an economic system in which the government owns some or all of the factors of production?

A

Socialism

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38
Q

What is an economic system in which the government owns all the factors of production and there is little or no political freedom?

A

Communism

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39
Q

Typically communism will become ________.

A

Authoritarian

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40
Q

What requires absolute obedience to those in power?

A

Authoritarian system

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41
Q

What is established through the democratic political process rather than through the violent overthrow of the government?

A

Democratic socialism

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42
Q

the government owns the basic industries, but other industries are privately owned?

A

Democratic socialism

43
Q

Where was Marx born? What year? Class ranking?

A

Germany
1818
Middle Class family

44
Q

Why was he exiled from his homeland?

A

He became involved in radical politics

45
Q

During Marx travels, Who did he meet that was a son of a factory worker?

A

Friedrich Engels

46
Q

What did Marx conclude that the Industrial Revolution created?

A

A system of wage slavery

47
Q

According to Marx, The whole industrial system was based on ______.

A

The exploitation of workers

48
Q

Marx, assisted by Engels, laid out ideas of worker overthrow in ___________.

A

The Communist Manifesto (1848)

49
Q

_________ still has an economy with mostly command elements.

A

North Korea

50
Q

Advantages of Command Economies:

A
  • they seek to provide for everyone
  • Leaders in a command economy can use the nation’s resources to produce items that may not make money in a market economy
51
Q

Disadvantages of Command Economies

A
  • Central planners often have little understanding of local conditions
  • workers often have little motive to improve their productivity
  • often set prices well below those that would be established in a market system
  • Command economies face shortages
52
Q

Self-interested behavior is behind 2 features of a market economy:

A
  • Private property rights

- Market

53
Q

What are the rights of individuals and groups to own businesses and resources?

A

private property rights

54
Q

What is any place where people buy and sell goods and services?

A

Market place

55
Q

What is vital to any single sale or exchange?

A

Clear ownership

56
Q

What is necessary to make markets work properly?

A

Private property rights

57
Q

What is the principle that the government should not interfere in the economy called?

A

Laissez faire

58
Q

The concept of ________ is often paired with capitalism.

A

Laissez faire

59
Q

What is an economic system that is based on private ownership of the factors of production?

A

Capitalism

60
Q

What is the foundation of market economies?

A

Capitalism

61
Q

What operates on the belief that, on their own, producers will create the goods and services that consumers demand?

A

Capitalism

62
Q

What is a market economy in its pure form?

A

Laissez faire capitalism

63
Q

Is pure form good?

A

NO, nothing gets done

64
Q

What is a trade in which both traders believe that what they are getting is worth more than they are giving up?

A

Voluntary Exchange

65
Q

What guides voluntary exchanges?

A

Self-Interest ***

66
Q

Profit is considered a ______ ______ from a business transaction.

A

Financial gain

67
Q

What is the effort of two or more people, acting independently, to get the business of others by offering the best deal?

A

Competition ***

68
Q

What is the idea that because consumers are free to purchase what they want and refuse products they do not, they have the ultimate control over what is produced?

A

Consumer sovereignty ***

69
Q

What acts as a control on self-interested behavior, guiding market toward a balance between higher value and lower prices?

A

Competition

70
Q

What is a situation in which people concentrate their efforts in the areas in which they have an advantage?

A

Specialization

71
Q

Specialization removes the need for households to be _______, and markets allow households to trade for what they need.

A

self-sufficient ***

72
Q

Specialization, then, leads to higher quality yet lower _________.

A

priced products

73
Q

What is a tool that economists use to understand how market economies operate?

A

The circular flow model ***

74
Q

The model represents two key economic decisions makers in a market economy:

A
  • households

- businesses

75
Q

The market for goods and services is called the _______ _________.

A

Product market

76
Q

The product market isn’t a place as much as it is a ______.

A

set of activities

77
Q

What are the suppliers of the product market?

A

businesses

78
Q

What is the market for the factors of production?

A

the factor market

79
Q

who owns all of the factors of production?

A

individuals

80
Q

In the factor market, who are the customers, and who are the producers?

A
  • businesses are the customer

- individuals are the producer

81
Q

Advantages of Market Economies:

A
  • Economic and Political Freedom
  • Profit
  • Incentives
82
Q

How are Economic and Political Freedoms an advantage of market economies?

A
  • Freedom is one of the chief advantages of a market economy
  • Fewer areas of govt involvement unlike the command economy
  • A market economy also can be responsive to changes in conditions and accommodate those changes quickly
  • Individuals in local communities are free to make their own economic choices without the interference of the government
83
Q

How is profit an advantage of market economies?

A

It is a key feature of the market economy, ensures that resources will be allocated efficiently, since inefficiencies would result in lower profits

84
Q

Incentives to come up with good ideas is related to another disadvantage of a market economy:

A

Competition

85
Q

What leads to higher quality products at lower prices and helps create a diverse product market?

A

Competition

86
Q

In a pure market economy, What is the primary focus?

A

The economic good of the individual

87
Q

What are disadvantages of a market economy?

A
  • pure market economies have no mechanism for providing public goods and services ie. National Defense
  • Pure market economies cannot provide security to those who, bc of sickness or age, cannot be economically productive
  • Nor can it prevent the unequal distribution of wealth, even though the gap may be the result of unequal opportunities
88
Q

What is the most common type of economic system today?

A

mixed economy ***

89
Q

A mixed economy is an economy that has elements of _______, ________, and ________ systems.

A
  • traditional
  • command
  • market
90
Q

Although all modern societies are mixed, they often emphasize _______ over ______.

A

one type of system over another

91
Q

In the United states, the _______ dominates.

A

the market economy

92
Q

Even though there are a traditional and command elements, the driving forces of the US economy are such features as ________ _________ and __________.

A

private ownerships

markets

93
Q

France tried to find a middle ground between ______ and ________.

A

Socialism and capitalism

94
Q

________, while also a mixed economy, has much greater govt involvement.

A

Sweden

95
Q

The _______ govt and govt related organizations own 1/3 of all Swedish companies.

A

Swedish

96
Q

Swedish citizens receive _______________ social benefits.

A

“cradle to grave” ***

97
Q

More recently, many economies have moved away from _____ systems to _______ systems.

A

Command

market

98
Q

to _____ means to change from private ownership to govt or public ownership.

A

nationalize ***

99
Q

To ___________ means to change from govt or public ownership to private ownership.

A

privatize ***

100
Q

What is one way to help privatize an industry?

A

to open it up to foreign investors

101
Q

This kind of economic tie between nations is only one example of the _______ _______.

A

global economy

102
Q

What refers to all the economic interactions that cross international boundaries?

A

The global economy ***

103
Q

What has been enhanced by cross-border business partnerships?

A

Globalization

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