Economic Behaviour Flashcards
Define central authorities.
Central authorities are all public agencies, generally referred to as “the government”.
What is budget surplus?
A surplus that occurs when the government’s revenues are greater than it’s expenditures
Define circular flow.
Movement from products markets to resource markets and back again, which is interrupted by withdrawals and injections.
Deficit spending is…
Deficit spending occurs when the government’s expenditures are greater than its revenues.
Discount rate is…
It is the interest rate charged by the Federal Reserve Bank for lending money to member banks.
Define discretionary spending.
The portion of the federal budget that consists of current spending, rather than carryovers from previous years.
Disposable income is defined as…
National income less taxes and plus welfare payments. What people really have to spend or to save.
What is equilibrium?
The price and quantity at which both buyers and sellers are compatible—the quantity supplied equals the price buyers are willing to pay.
What is factor and resource markets?
Markets in which households sells the factors of production that they control.
Define firms
Firms are units that decide how to use labor, lands, and capital and which goods and services to produce.
What is fiscal policy?
It is the use of public expenditures and taxation powers by the government to change the outcomes of the economy.
Full employment is…
It is a low rate of unemployment, between 4-5%.
GDP stands for?
Gross Domestic Product. It is the total output of goods and services produced within the confines of the United States, by American or foreign-supplied resources, as well as all income earned.
GNP stands for?
Gross National Product. It is the total output or dollar value of the economy divided by the total population.
Household is defined as…
It is where all the people who live under one roof and who make financial decisions as a unit. Also called the consumer.
Define income policy.
It is an attempt to use wage and price controls to direct economic outcomes.
What is inflation?
Inflation is a situation in which demand cannot be matched by an increase in supply, resulting in rising prices.
What is marginal productivity?
Marginal productivity is the value people’s work adds to total output.
Define market demand.
It is the combined willingness of individuals or firms to buy a specific number of products at a specific price.
Monetary policy is defined as?
It is the use of money and credit to control economic outcomes.
What defines a multiplier effect?
When government spending that produces more income, results in higher consumption expenditures, and translate into a higher aggregate demand.
What is Phillips curve?
It is a graphic illustration of the conflict between full employment and price stability: lower rates of unemployment are usually accompanied by higher rates of inflation.
Define product markets.
They are markets in which firms sell their production of goods and services.
Define social indicators.
They are ways of measuring the level of real benefits resulting from a specific level of output.
