Final Exam Flashcards
(181 cards)
1
Q
The economic equivalent of the evolutionary idea of survival of the fittest
A
Economic Darwinism
2
Q
Equally distributing a nation’s pool of wealth to all its citizens
A
Economic leveling
3
Q
If a business firm takes a _______ ___________ approach, it relies more on human labor
A
Labor intensive
4
Q
During times of _________ _________, a nation’s business firms increase their production of goods and services with greater efficiency
A
Intensive growth
5
Q
Goods that individuals purchase for personal use
A
Consumer goods
6
Q
What firms use to produce other consumer items
A
Capital goods
7
Q
Firms that mostly use automated equipment for labor
A
Capital intensive
8
Q
The only economic right a nation should entitle to its citizens is the right to own and use property without government interference
A
Libertarian fairness
9
Q
Each person in a nation has a right to a part of that nation’s wealth simply because they are a part of the human race
A
Egalitarian fairness
10
Q
An increase in the quantity of goods and services a nation can produce
A
Economic growth
11
Q
What is a society’s economic problem?
A
How best to accomplish its economic goals
12
Q
How is the consumer goods/capital goods trade off a matter of spending vs. saving?
A
When people spend money for consumer goods rather than save it, financial institutions do not have money available to loan to businesses and the inverse is true
13
Q
What way does the bible give for a person to generate his own personal income? Give a bible verse to support this.
A
Work- Proverbs 10:4, Proverbs 12:27, Proverbs 22:29
14
Q
What should be the standard that Christians use to answer the distribution question?
A
Scripture
15
Q
How is unemployment a problem for society?
A
Waste of human labor and is usually accompanied by poverty, crime, and despair
16
Q
True/ False: What will be produced is one of the three critical questions every society must answer when seeking to meet its economic goals.
A
True
17
Q
True/ False: Loving your neighbor isn’t one of the three biblical principles that provide a basis for our treatment of the poor.
A
False
18
Q
True/ False: A labor intensive business uses a lower number of workers than a capital intensive business.
A
False
19
Q
True/ False: With extensive growth, an economy produces less goods and services by decreasing its amount of land, labor, and capital.
A
False
20
Q
True/ False: A low level of unemployment and a fair distribution of income are two of the four economic goals most societies have.
A
True
21
Q
Socialism in its most extreme form
A
Communism
22
Q
When a nation’s government assumes ownership of companies on a large scale
A
Nationalism
23
Q
When the national government should be both the central owner and decision maker in all economic affairs of the state
A
Centralized socialism
24
Q
High taxes and redistributed funds OR a nation under extreme state capitalism
A
Welfare state
25
To let alone OR what Adam Smith saw as the true path to national enrichment
Laissez faire
26
True/ False: When a nation buys more goods from other nations than it sells to them, that nation has a favorable balance of trade.
False
27
True/ False: Eastern European nations pioneered the economic policy of mercantilism.
False
28
True/ False: With capitalism, the government generally has more control over the private business owner.
False
29
True/ False: Public goods are usually provided by government because business firms could not supply them and make a profit.
True
30
Capitalism in its most extreme form, really only exists as an economic theory
Radical capitalism
31
When a nation sells more goods to other nations than it purchased from them
Favorable balance of trade
32
Private citizens own the vast majority of natural resources, financial capital, and labor but the government freely intervenes in economic decision making
State capitalism
33
Marx argued that any arrangement of the tools of production short of total state ownership would be counterproductive
Communist Manifesto
34
Form of capitalism that arose from the writings of Adam Smith
Classic liberal capitalism
35
Good and services that benefit all or nearly all of a nation's people
Public goods
36
Transitional economic system bridging the gap between capitalism and socialism
Social democracy
37
When a government decides to sell their nationalized businesses back to private stockholders
Privatization
38
More government control in an economy
Socialism
39
Less government control in an economy
Capitalism
40
What was the major economic goal of European countries from the 1500's to 1700's?
Mercantilism, wanted to increase their holdings of gold and silver
41
Name three economic systems and for each one answer who owns the factors of production and who owns the three key economic questions.
Page 120
42
Name two economic principles of capitalism supported by Scripture and give a reference for each.
1) private ownership of property- Acts 5:4
| 2) principle of individual accountability- Luke 12:47-48
43
According to Adam Smith, what are the two keys to the economic prosperity of a nation?
1) limited government
| 2) personal responsibility
44
According to Adam Smith, what were two flaws in mercantilist economic policy?
1) the nation would exploit its resources to accumulate gold and silver at the expense of its own people
2) the aggressive actions of the mercantilist nation would create enemies
45
True/ False: Exploration is not one of the five points of mercantilism.
False
46
True/ False: The full title of Adam Smith's landmark economic treatise is "An Inquiry Into the Nature and Causes of Nations".
False
47
True/ False: According to the classical definition, liberalism does not equal liberty.
False
48
True/ False: One of the three functions of government according to Adam Smith is to protect its citizens from foreign invasion.
True
49
True/ False: Because it denies the legitimacy of government, radical capitalism is approved by Scripture.
False
50
General public owns and government manages
Public corporation
51
After buying shares of this, a person becomes owner of part of a corporation
Stock
52
Owned by individual citizens
Private corporation
53
Business with at least one general partner who has unlimited financial liability
Limited partnership
54
The lender
Creditor
55
A business enterprise with two or more persons as the owners
Partnership
56
True/ False: A limited partner holds all management responsibilities and makes all business decisions.
False
57
A separate entity recognized by law
Corporation
58
The act of becoming security for or pledging to undertake another's debt
Surety
59
A business firm with one owner
Sole proprietorship
60
Sets money in the business and has the right to inspect the books and share in the profits of the firm
Limited partner
61
When a credit-worthy person promises to pay a loan if the original borrower cannot
Cosigning
62
What are three advantages of a sole proprietorship?
1) freedom to enter/exit the market easily
2) freedom from outside control
3) freedom to retain info
63
What are the disadvantages of a partnership?
1) unlimited personal financial liability
2) uncertain life
3) potential conflicts between the partners
64
What are three advantages of incorporation?
1) limited personal financial liability
2) experienced management and specialized employees
3) continuous life
65
An LLC combines the benefits of which two forms of business ownership?
Partnership and corporation
66
According to the law, what is a corporation and what are it's important properties?
An artificial being, invisible, intangible, and existing only in the contemplation of the law
Important properties: immortality and individuality
67
True/ False: Two of the advantages of a partnership are greater management skills and greater possibilities of keeping competent employees.
True
68
True/ False: Two of the disadvantages of a sole proprietorship are unlimited personal financial liability and limited life.
True
69
True/ False: Scripture warns against becoming surety for another's debts.
True
70
True/ False: Two of the disadvantages of incorporation are lower taxes and less government regulation.
False
71
True/ False: Corporations are the most common form of business organizations in the USA.
False
72
A distribution of a portion of a corporation's profits
Dividends
73
Stockbrokers work for this fee
Commission
74
Where merchants trade stocks
Stock exchanges
75
The most well known stock index
DJIA
76
True/ False: The S&P 500 is intended to give a broad perspective on business in the US.
True
77
When stock prices rise in an industry of across the entire market simply because of expectations and they rise in excess of the corporations' true value
Speculative bubble
78
A group of stocks high are organized to help identify trends in certain industries
Stock indexes
79
True/ False: An IPO is known as an Initial Private Offering.
False
80
Founded by the government in 1934 to help ensure that corporations provide accurate and current info to the public about their financial situations and business dealings
Securities and exchange commission
81
Those who buy and sell stocks for the purpose of taking advantage of short-term price changes are engaging in this practice
Speculation
82
One of the most well-known stock markets
New York Stock Exchange
83
A person who generally works for a brokerage company and who specializes in buying and selling stocks on behalf of clients
Stockbroker
84
The most prevalent type of stock that companies offer and represents true ownership of the firm
Common stock
85
Another name for stock traders
Floor traders
86
Another of the most well-known stock markets
NASDAQ
87
Shareholders who own this type of stock receive their share payments before all others
Preferred stock
88
Used to be paper from a stock ticker but is now an electronic message board
Tape
89
Privately managed stock portfolios
Mutual funds
90
List three reasons that stock markets are important to the economy.
1) provide a place where corporations can raise needed revenue
2) provide opportunities for individuals to invest
3) provide valuable info concerning the state of the nation's economy
91
Identify each of the following as being associated with common or preferred shares of stock:
A. Shareholders receive dividends first
B. Owners have voting rights
C. Considered true ownership
A. Preferred
B. Common
C. Common
92
When and why was the SEC founded?
Founded following the Great Depression in order to protect investors by regulating brokers and exchanges and ensuring that corporations provide accurate info
93
In what two ways is a stock market like other markets?
It is a place for people who want to buy and sell to come together and the price of things are based on what consumers are willing to pay
94
Owning shares of stock not only makes a person a partial owner of a corporation but also gives that person what other opportunity?
Vote on business decisions proposed by the board of directors
95
True/ False: The NASDAQ is the largest stock exchange in the US that has no trading floor.
True
96
True/ False: The S&P 500 tracks industrial production along with other types of industries.
True
97
True/ False: "Buy high, sell low".
False
98
True/ False: Stock exchanges originated in Ireland and Belgium.
False
99
True/ False: The first stock exchange in the US developed in Philadelphia in 1790.
True
100
When firms sell the same good to different buyers at different prices
Price discrimination
101
When firms require smaller companies to purchase their full line of products
Tying contracts
102
When the government allows a firm an exclusive right to provide a good or service
Legal monopoly
103
An agreement among a small number of producers to reduce their output and increase prices
Collusion
104
Many producers of slightly differentiated goods
Imperfect competition
105
True/ False: With perfect competition, no single firm controls the price of products.
True
106
True/ False: Barriers to entry may be either natural or artificial.
True
107
True/ False: Differentiated products are exactly alike, regardless of which firm produced them.
False
108
True/ False: Industry refers to the arrangements that people have developed for trading with one another.
False
109
"Selling by a few"
Oligopoly
110
The arrangements that people have developed for trading with one another and competition is the struggle each firm experiences as it seeks to survive and then thrive within those arrangements
Market
111
Visibly different from one firm to another
Differentiated products
112
Occur when firms already in the industry own all a vital natural resource that a new firm would need to enter the market
Natural barrier to entry
113
Form of market organization in which there is only one supplier in the industry
Monopoly
114
When a firm controls 100% of a resource that is essential to an industry
Natural monopoly
115
When a firm places one or more directors on the boards of competing firms
Interlocking directorates
116
When the head of a large company persuades other firms to put their stock in one account
Trust
117
Agreement among a small number of producers to reduce their output and increase prices
Collusion
118
What is an industry?
A group of businesses that sell a similar product, sell to a certain group of customers, or produce their product in a similar way
119
List the four different characteristics of market organization.
1) number of firms in the industry
2) differences in products sold
3) control of price
4) ease of entering/exiting market
120
What government agency was created to enforce a particular act from 1914 and what additional responsibility was it later given?
Federal Trade Comission- consumer protection
121
Why is it extremely difficult for a monopolistic firm to exit the industry?
The firm is the sole provider of a product or service
122
What type of business is one of the best examples of perfect competition?
Farming a certain crop (soybeans, corn, wheat, etc)
123
What is the most prevalent form of competition in America today?
Imperfect competition
124
What is the most important characteristic of an oligopoly and what does this term mean?
Mutual interdependence- the production decisions of one firm affect the profits of another
125
List three of the five congressional acts that were passed between 1890 and 1950 to preserve competition.
1) Sherman Anti-Trust Act of 1890
2) Clayton Act of 1914
3) Robinson-Patman Act of 1936
126
What is the difference between a monopoly and a trust?
Monopoly- one business
| Trust- multiple businesses acting as one under the same manager
127
True/ False: An anticompetitive takeover is when a few big companies require that smaller companies guy from them and purchase their full line of products.
False
128
True/ False: A legal monopoly is when the government does not allow a firm the exclusive right to provide a good or service.
False
129
True/ False: A cartel has nothing to do with collusion.
False
130
An oligopoly composed of two business firms
Duopoly
131
Exists when there are many producers selling an identical product, no single firm controls the price, and businesses find it relatively easy to enter and exit the market
Perfect competition
132
How does Romans 12:2 apply to the development of the one's opinions?
The renewing of the mind will transform a person's ideas about public policy
133
Identify the four stages of public policy development.
1) identifying the issue
2) setting the agenda
3) formulating policy
4) implementation and evaluation
134
What are the basic modern implications of the words "liberal" and "conservative"?
Liberalism- implies a belief that more government influence is better
Conservatism- usually implies a reluctance to expand government authority
135
How are executive and judicial branches of government involved in public policy?
Executive branch- State of the Union address, executive orders, treaties, and diplomatic agreements
Judicial branch- court decisions
136
Why must politicians be wary of public opinion?
Public opinion may change quickly and may also be based on incorrect info
137
True/ False: Another name for an interest group is "influence group".
False
138
True/ False: The media would never give up certain info more extensive or prominent coverage to manipulate the public.
False
139
True/ False: Three of the five categories of interest groups are economic, single-interests and civic.
True
140
True/ False: With opinion polls, different wording of specific questions never really leads people to make different responses.
False
141
True/ False: Some public opinion issues have lasting interests while others are short-lived.
True
142
The arrangements that people have developed for trading with one another and competition is the struggle each firm experiences as it seeks to survive and then thrive within those arrangements
Market
143
Visibly different from one firm to another
Differentiated products
144
Occur when firms already in the industry own all a vital natural resource that a new firm would need to enter the market
Natural barrier to entry
145
Form of market organization in which there is only one supplier in the industry
Monopoly
146
When a firm controls 100% of a resource that is essential to an industry
Natural monopoly
147
When a firm places one or more directors on the boards of competing firms
Interlocking directorates
148
When the head of a large company persuades other firms to put their stock in one account
Trust
149
Agreement among a small number of producers to reduce their output and increase prices
Collusion
150
What is an industry?
A group of businesses that sell a similar product, sell to a certain group of customers, or produce their product in a similar way
151
List the four different characteristics of market organization.
1) number of firms in the industry
2) differences in products sold
3) control of price
4) ease of entering/exiting market
152
What government agency was created to enforce a particular act from 1914 and what additional responsibility was it later given?
Federal Trade Comission- consumer protection
153
Why is it extremely difficult for a monopolistic firm to exit the industry?
The firm is the sole provider of a product or service
154
What type of business is one of the best examples of perfect competition?
Farming a certain crop (soybeans, corn, wheat, etc)
155
What is the most prevalent form of competition in America today?
Imperfect competition
156
What is the most important characteristic of an oligopoly and what does this term mean?
Mutual interdependence- the production decisions of one firm affect the profits of another
157
List three of the five congressional acts that were passed between 1890 and 1950 to preserve competition.
1) Sherman Anti-Trust Act of 1890
2) Clayton Act of 1914
3) Robinson-Patman Act of 1936
158
What is the difference between a monopoly and a trust?
Monopoly- one business
| Trust- multiple businesses acting as one under the same manager
159
True/ False: An anticompetitive takeover is when a few big companies require that smaller companies guy from them and purchase their full line of products.
False
160
True/ False: A legal monopoly is when the government does not allow a firm the exclusive right to provide a good or service.
False
161
True/ False: A cartel has nothing to do with collusion.
False
162
An oligopoly composed of two business firms
Duopoly
163
Exists when there are many producers selling an identical product, no single firm controls the price, and businesses find it relatively easy to enter and exit the market
Perfect competition
164
What term implies that a merchant must accept in the payment of debts whatever the government declares to be money?
Legal tender
165
What three functions does money serve?
1) a means of payment for goods and services
2) a measure of value
3) a means of storing purchasing power
166
What characteristics should an effective monetary system possess?
1) convenience
2) portability
3) divisibility
4) durability
5) stability
167
What are the three kinds of money that can circulate in an economy?
1) commodity money
2) representative money
3) fiat money
168
Name the two measures of the money supply discussed in the book and list what each includes.
1) M-1: comprises paper currency, coins, traveler's checks, and checking accounts
2) M-2: comprises a variety of savings accounts and M-1
169
What does it mean to say that the United States has a dual banking system?
There are banks regulated by state charters and banks regulated by national charters
170
What are the three functions of commercial banks?
1) accepting deposits
2) extending loans
3) providing miscellaneous services
171
Which type of thrift usually originates with a group of people who have something in common (usually employment)?
Credit unions
172
Give an example of a contractual saving institution.
Insurance companies
173
Name an advantage and a disadvantage of the traditional money system used on Yap Islands.
Advantage- very easily identifiable
| Disadvantage- lack of portability
174
How does money act as a store of purchasing power?
By keeping its face value, money can be received and exchanged for something at one time and for something of comparable value at a later time
175
Which characteristic of money do you consider the most important and why?
Opinion
176
Are today's coins full-bodied or token coins? Explain.
Token coins, because the metal in them is of less value than their face value
177
What is the name given to unbanked money when it is issued by a government decree?
Fiat money
178
What two factors keep the fiat system functioning?
1) faith that others will accept the money that we have accepted
2) a limited quantity of that money
179
What type of money does the United States currently use?
Fiat money
180
Why can commercial banks also be referred to as full-service banks? Give examples.
They offer a wide range of service to their customers, such as checkings and savings accounts, debit and credit cards
181
For what economic position was Milton Friedman a leading spokesman and what did that position see as the principle cause for inflation?
Advocated the monetarist approach and the principle cause for inflation was the money supply
