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Bus 1201 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Define Economics

A

The study of how a society uses scarce resources to produce and distribute goods and services

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2
Q

What is the difference between microeconomics and macro economics

A

microeconomics- focuses on individual parts of the economy, such as households or businesses

Macroeconomics- focuses on the economy s a whole by looking at aggregate data for large groups of people, companies, or products.

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3
Q

What are the 5 Factors of Production

A

The resources used to create goods and services, including natural resources, labour, capital, entrepreneurship, and knowledge

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4
Q

What are natural resources

A

Commodities that are useful inputs in their natural state

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5
Q

Define Labour

A

Economic contributions of people

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6
Q

Define Capital

A

The inputs used to produce goods and services and get them to the customer. ex) tools, machinery, equipment, buildings

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7
Q

Define Entrepreneurs

A

People who combine the inputs of natural resources, labour, and capital to produce goods and services with the intention of making profit

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8
Q

What is Entrepreneurial thinking

A

Thinking like an entrepreneur

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9
Q

Define Knowledge

A

The combined talents and skills of the workforce

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10
Q

What is Circular flow

A

The movements of inputs among households, businesses, and governments; a way of showing how the sectors of the economy interact.

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11
Q

What are the steps of Economics as a circle of flow

A
  • House holds provide inputs
  • Businesss convert theses inputs into outputs for consumers to purchase
  • consumers receive income through the resource market
  • Businesses receive income from consumer purchases of goods
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12
Q

What is the economic system

A

The combination of policies, laws, and choices made by a nations government to establish the systems that determine what goods and services are produced and how they are allocated

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13
Q

What are the major differentiations among economic systems

A
  • best satisfy unlimited societal needs
  • choose what goods and services to produce and in what quantities
  • determine how to produce these goods and services and who will produce them
  • distributed goods and service to consumers
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14
Q

Define market Economy

A

An economic system based on competition in the marketplace and private ownership of the factors of production

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15
Q

What is market economy based on

A

based on competition in the marketplace and private ownership of the factors of production

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16
Q

What does a market economy guarantees

A
  • right to own property
  • right to make profit
  • right to make free choice
  • right to compete
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17
Q

What are primary economic systems

A

Market Economy- Private: Free capitalism, let the market decide price
Command Economics- Government owns all the means of production
Socialism- government decides to own some of the key industries (ex. Healthcare)
Mixed Economics- a blend of both private and government owned businesses

18
Q

Define market structure

A

The number of suppliers in a market

19
Q

What are the four market structures and define them

A

Perfect competition- Large numbers of small firms. Ex. farming
Monopolistic competition- many firms Ex. iPhone and Samsung (owning a specific technology but competing against each other)
Oligopoly- Few firms ex. Banks
Pure Monopoly- One firm

20
Q

Define Demand

A

The quantity of a good or service that people are willing to buy at various prices

21
Q

What is a demand curve

A

A graph showing the quantity of a good or service that people are willing to buy at various prices

22
Q

Define supply

A

The quantity of a good or service that businesses will make available at various prices

23
Q

define equilibrium

A

The point at which quantity demanded equals quantity supplied

24
Q

What does (GDP) stand for and what is it

A

Gross domestic product

The total market value of all final goods and services produced within a nations borders in a year

25
Q

What does GNP stand for and define it

A

Gross national product
the total market value of all final goods and services produced by a country regardless of where the factors of production are located

26
Q

Define recession

A

A decline in GDP that lasts for at least two consecutive quarters

27
Q

What are Macro economics main goals

A
  • Striving for economic growth
  • Keeping people on the job
  • Keeping prices steady
28
Q

define full employment

A

The condition when all people who want to work and can work have jobs

29
Q

Define unemployment rate

A

The percent of labour force that is actively looking for work but is not actually working

30
Q

What are the four types of unemployment rate

A

Frictional Unemployment- Quite Job and didn’t find another yet

Structural Unemployment- Industries short of workers

Cyclical Unemployment- varies based on the
economy’s cycle (2008 financial collapse)

Seasonal Unemployment- Construction or other industries based on seasons

31
Q

Define Inflation

A

The situation is which the average of all prices of goods and services is rising

32
Q

Define purchasing power

A

The value of what money can buy

33
Q

What are the types of inflation and describe them

A

demand pull- occurs when the demand for goods and services is greater than the supply

cost-push- occurs when increases in production costs push up the prices of final goods and services

34
Q

What does CPI stand for and define it

A

Consumer price index- an index of prices of a shopping basket of goods and services purchased by consumers

35
Q

What does PPI stand for and define

A

producer price index- an index of the prices paid by producers and wholesalers for various commodities, such as raw material, partially finished goods, and finished products

36
Q

what is the Bank of Canadas objective

A

is the economic and financial well-being of Canada by creating a sound balance of growth, employment, and price stability

37
Q

What is monetary policy

A

The measure taken by the bank of Canada to regulate the amount of money in circulation to influence the economy

38
Q

What is contractionary policy

A

The use of monetary policy by the bank of Canada to regulate the amount of money in circulation to influence the economy

39
Q

what is expansionary policy

A

the use of monetary policy by the bank of Canada to increase the growth of the money supply

40
Q

What is the fiscal policy

A

The governments use of taxation and spending to affect the economy

41
Q

define crowding out

A

The situation that occurs when government spending replaces spending by the private sector

42
Q

Define bonds

A

Securities that represent long-term debt obligations (liabilities) issued by corporations and governments

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