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Final S1 Flashcards

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0
Q

4 questions each economy must answer

A
  1. What and how much should be produced?
  2. Who should produce what?
  3. How should goods/services be produced?
  4. Who should share in what is produced?
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1
Q

3 factors that affect quantity demanded

A
  1. The necessity of the item - how essential is the good/service?
  2. Real income effect - amount of goods/services you can buy ($)
  3. Substitution effect - substituting a comparable product at a cheaper price
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2
Q

Adam Smith

A

Founder of market economies who theorized that an invisible hand would protect a capitalist economy

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3
Q

Aggregate supply and demand

A

The total amount of goods/services supplied and demanded

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4
Q

Annual percentage rate (APR)

A

Cost of credit expressed as a yearly percentage that includes all costs of borrowed money.
Shows all hidden expenses

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5
Q

Bonds

A

Certificate issues by a company or the govt in exchange for borrowed funds with the promise to pay a stated rate of interest for a given period of time

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6
Q

Bait and switch

A

Deceptive advertising practice in which a store attracts customers with offering a product at a low price, then tries to sell a similar product but at a higher price

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7
Q

Certificates of deposit (CD’s)

A

Time deposits that state the amount of the deposit, maturity date and the rate of interest being paid

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8
Q

Changes in supply

- Based on 3 factors

A

A shift in the entire curve based on a change in supply at the same price

  1. Cost of production
  2. Effects of technology
  3. Entrance/Exit of competition
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9
Q

Brand name

A

Word, picture, or logo on a product that helps customers tell it from similar products of competitors

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10
Q

Collateral

A

Something of value that a person uses as a promise to repay a loan

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11
Q

Comparison shopping

A

Getting info about types and prices of products from various stores or companies

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12
Q

Consumer price index (CPI)

A

A statistical measure of the average of prices of a specified set of goods/services purchases by typical consumers in city areas

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13
Q

Inflation

- 2 main causes

A

Prolonged rise in the general price level of final goods/services because there is too much $ in the economy

  1. Demand pull inflation
  2. Cost push inflation
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14
Q

Demand pull inflation

A

Theory that prices rise as the result of excessive business and consumer demand; demand increases faster than total supply, resulting in shortages that lead to higher prices

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15
Q

Cost push inflation

A

Theory that higher wages push up prices

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16
Q

Fixed expenses

A

Payments that must be made that are relatively consistent over time (rent, mortgage, insurance etc)

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17
Q

Flexible expenses

A

Payments that must be made that may vary greatly from month to month

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18
Q

Credit rating

A

Rating of the risk involved in lending money to an individual or business

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19
Q

Credit union

A

Depository institution owned and operated by its members to provide savings accounts and low-interest loans to its members only

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20
Q

Debit card

A

Credit card that acts like a checking account (your $)

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21
Q

Disposable income

A

Income remaining for a person to spend or save after all taxes have been paid

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22
Q

Discretionary income

A

Money income a person has left to spend on extras after necessities have been bought

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23
Q

Electronic funds transfer act of 1978

A

If your credit card is stolen you are only responsible for $50 of the debt

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24
John Maynard Keynes
Single handedly created the deficit. Said it is ok to spend money when your people are in need
25
Discount rate
The interest rate that the Fed charges on loans to banks
26
Budget debt
The summation of all governments past deficits and surpluses
27
Budget deficit
Whenever the govt spends more than it collects for a given year
28
Credit
Receiving of money either directly or indirectly to buy goods and services in the present with the promise to pay for them in the future
29
Principal
Amount of money borrowed in a loan
30
Loan
Lending of money that will be payed back with interest
31
Installment debt
Repayment of a debt divided into equal amounts or installments over a period of time
32
Finance companies
Company that takes over contracts for installment debt from from stores and adds a fee for collecting the debt; also makes loans directly to consumers
33
Regular change account
Also known as a 30 day charge; no interest is charged but the entire bill is due at that time. (Ex: gas cards)
34
Credit card
Card used to create an agreement that allows a person to make purchases without paying cash
35
Revolving charge account
Agreement that allows a person to make purchases without paying cash. Purchases may be paid off gradually but interest is charged on the unpaid balance (ex: department store cards)
36
Refinance
To satisfy a debt by making another loan with new terms
37
Installment charge account
Agreement that allows a person to make purchases without paying cash for major items to be paid through equal payments/installments over a period of time with use of a credit card
38
Command economy
System in which the government controls the factors of production and makes all decisions about their use
39
Consumer decision making checklist (4 items)
1. Do I really need this item? 2. Is this good/service worth the time I spent earning the income to pay for it? (worth the price) 3. Is there any better use for my income right now? Save $? 4. Do I want high, medium, or low quality?
40
5 Consumer rights
1. The right to safety 2. The right to be informed 3. The right to choose 4. The right to be heard 5. The right to redress (complain)
41
Cyclical unemployment
Unemployment associated with the fluctuations in the business cycle
42
Diversification
Spreading investment over several different types to lower risk
43
Market economy (ie: capitalism)
System in which individuals own the factors of production and have the right to use those resources in any way within the limits of the law
44
Want
Anything other than what is needed to survive
45
Need
Basics required to survive
46
Value
Beliefs or characteristics that a person or group considers important
47
Economics
The study of how people make choices about ways to use limited resources to fulfill their wants
48
Factors of production
Resources of land, labor, capital and entrepreneurship used to produce goods/services
49
5 factors of production
1. Land 2. Labor 3. Capital 4. Entrepreneurship 5. Technology
50
Economy
The production and distribution of goods/services in a society
51
Scarcity
Basic economic problem that results from a combination of limited resources and unlimited wants
52
Goods
Tangible objects that can satisfy peoples wants or needs
53
Services
Action that can satisfy peoples wants or needs
54
Opportunity cost
Value of next best alternative given up for what's chosen
55
Elastic and inelastic demand (ie: price elasticity of demand)
Responsiveness to changes - Elastic: demand changes substantially - Inelastic: demand changes unsubstantially (necessity such as gas, milk, and have no substitute)
56
Equilibrium
Point at which supply and demand meet
57
Fiscal policy
Federal govts use of taxation and spending policies to affect overall business activity
58
Fractional reserve banking system
System in which only a fraction of deposits are kept in hand (in reserve) - used by the Fed
59
Law of supply
At higher profits, a larger quantity of a given item will be produced and vice versa
60
Law of demand
As price increases, quantity demanded decreases and visa versa
61
Loose monetary policy
Designed to stimulate the economy by making credit available and abundant - instituted by the Fed
62
Tight monetary policy
Designed to slow the economy by making credit expensive and scarce (used to curb inflation and rapid growth) - instituted by the Fed
63
Supply side economics
Advocate reductions in tax rates to stimulate private investment and employment - heavily endorsed by republicans - democrats endorse demand side economics
64
Monetary policy
Used to regulate the supply of money in the economy (Affects value, credit, and business activity)
65
Quantity demanded
Amount of demand based on price (identified along the same demand curve)
66
Change in demand
A shift in the entire curve based on change in demand at the same price
67
3 factors that affect changes in demand
1. Change in income 2. Tastes and preference 3. Related goods - substitute and complementary
68
Recession
Part of business cycle in which the nations out put (real GDP) declines for at least 6 months
69
The Federal Reserve Banking System (the fed)
Also known as the centralized bank of the US. It's job: 1. To be the govt bank 2. Manages the flow and circulation of money in the economy 3. Provide confidence in people (prevents runs and panics) 4. Provides emergency $ to banks 5. Supervise and regulate other banks
70
Unemployment rate
The percentage of civilian labor force that is without jobs but is actively looking for work
71
Mutual Funds
Investment fund that pool stocks, bonds, and/or other investments (Basket of stuff) (Safer risk/ more conservative than stocks)
72
NASDAQ
It is a system for selling stocks electronically | National association of securities dealers automated quotations
73
Unsecured loan
Loan not guaranteed by anything other than the promise to repay it
74
Stock
Share of ownership in a company
75
Stock market indexes
Measure of what is happening to a given set of stocks for a specified list of companies
76
Informative advertising
Advertising that gives info about a product
77
The Dow Jones Industrial averages (the Dow)
A group of 30 selected companies whose stock values are averaged to give a general sense of the overall stock market performance
78
5 basic elements of Marxism
1. History is governed by economics 2. There is always an inevitable conflict between the exploited (working class) and the exploiting (ruling class) 3. The bourgeoisie (ruling class) are doomed to be overthrown by the proletariat (working class) 4. Socialism follows and wealth is redistributed equally 5. Finally, the state itself will be unnecessary and wither away, giving way to the final state: Communism (political, social, and economic equality)
79
Surplus
Greater amount supplied than demanded of a product (occurs about equilibrium)
80
Shortage
Greater amount demanded than supplied of a product (occurs bow equilibrium)
81
Credit risk
The risk involved in lending someone money
82
Good credit risk
Good risk is exhibited when someone keeps the same job for a while, pays on time, etc
83
GDP
The sum of all the products made in one year to show the overall profit in a year
84
Pure economic systems
There is no such thing
85
Trade off
Trade something for another. (Ex: money for food, sleep for being on time)
86
Land
Natural resources and surface land and water
87
Labor
Human effort directed toward producing goods/services
88
Capital
Previously manufactured goods used to make other goods/services ($)
89
Entrepreneurship
When individuals take risks to develop new products and start new businesses in order to make profits
90
Technology
The use of science to develop new products and new methods for producing and distributing goods/services

Economics (4 decks)

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