Chapter 2 Flashcards
(25 cards)
Economics
The choices we make to allocate resources
Macroeconomics
Study of a country’s overall economic dynamics ( inflation, gdp, price levels, unemployment
Microeconomics
Small economic units (the pricing of products and money)
Fiscal Policy
Taxation (a budget) and spending (influence the economy through)
Debt ceiling
Max amount congress lets the govt. Burrow
Fiscal cliff
Across-the-board spending cuts and sharp tax hike to decrease the U.S budget deficit
Monetary policy
Federal reserves that influence interest rates and the supply of money
M1 money supply
Cash and travelers check
M2 money supply
All of m1 money supply and savings
Reserve requirements
Rules set which specifies the minimum amount of reserves a bank is required to hold
Discount rate
Lending rate from feds
Open market operations (opo)
Buying and selling bonds
Capitalism
Free market system
Privately owned
Pure competition
Many competitors/ identical products/ barriers low
Monopolistic competition
Many comp/similar products/barrier low
Oligopoly
Handful comp/similar products/barrier high
Socialism
Govt. Owned public welfare
Communism
Govt. Owned
Supply
Quantity of products that producers are willing to offer
Demand
Quality of products that consumers are willing to buy
Equilibrium price
Supply = demand
GDP (gross domestic product)
Total value of all goods and services over a given time
Unemployment rate
% of people in the labor force over 16 who do not have jobs
Frictional unemployment
When it is possible to find better jobs
