Chapter 2 Flashcards

(19 cards)

0
Q

PPC

A

production possibilities curve

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1
Q

Purpose for economic models

A

instruct & predict

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2
Q

GDP

A

gross domestic product- sum of goods & services business produce & sell

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3
Q

Consumption expenditures

A

Total of what households spend on GDP

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4
Q

Factors of production

A
  • Capitol, Entrepreneurship, land, labor

- business gets from household

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5
Q

Land

A

Natural resources that go into production of goods

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6
Q

Labor

A

Human effort that goes into creation of goods & services

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7
Q

Capitol

A
  • Goods used to produce other goods
  • money household loans to business
  • tools business uses to produce their goods & services
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8
Q

Entrepreneurship

A
  • Most important factor of production

- creatively combining land, labor, & capitol in unique ways to develop new & useful goods & services

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9
Q

Factor cost

A
  • rent, wages, profit, interest

- represents payments business firms make in exchange for factor costs (business -household)

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10
Q

Rent

A

Payments for use of owner’s property

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11
Q

Wages

A

Payments for labor used to produce goods or services

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12
Q

Interest

A

Payments business make on borrowed money

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13
Q

Profit

A

Difference in revenue from sells & capitol that went into production

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14
Q

Transfer payments & (gov’t buys from businesses)

A

Money or goods given to household from gov’t w/ mo expectations of repayment

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15
Q

Personal & business tax

A

Household & business pay taxes to gov’t to help pay for its expenses

16
Q

Budget deficit

A

Gov’t spends more than it receives

17
Q

Budget surplus

A

Gov’t receives more in taxes than it pays out

18
Q

Savings & dissaving

A

Household saves money in bank & withdraws or borrows from bank