Ideas in Economics Flashcards
(21 cards)
What is scarcity?
productive resources that are limited
What is marginal cost/benefit?
compare additional cost of alternatives with additional benefits
What is allocation of goods and services?
individual or groups collecting different goods and services from the public
What is the role of incentives?
people respond predictably to positive and negative incentives
What is gain from trade?
voluntary exchange occurs when all parties expect to gain
What is specialization and trade?
individual/regions/nations specialize in what they can produce at the lowest cost then trade
What is price and quantity determination?
buyers and sellers interact which determines market prices and allocates scarce goods and services
What is the role of price in market system?
prices send signals and provide incentives to buyers and sellers
What is the role of competition? (sellers)
lowers costs and encourages producers to produce more.
What is the role of competition? (buyers)
increases prices and allocates goods and services to those who are willing/able to pay for them
What is the role of economic institution?
banks, labor unions, corporations, and legal systems evolve in market economies to help individuals and groups accomplish their goals
What is the role of money?
makes it easier to trade, borrow, save, invest, and compare the value of goods and services
What is the role of interest rates?
rise and fall to balance the amount saved with the amount borrowed
What is the role of resources in determining income?
what workers earn depends on the market value of what they produce and how productive they are
What is profit and the entrepreneur?
people who take the risks of organizing productive resources to make goods and services
What is growth?
investments in factories, machinery, new technology, and in the health, education, and training of people to raise future standards of living
What is the role of government?
to provide government programs with benefits that outweigh the costs
How to use cost/benefit analysis to evaluate government programs?
policies sometimes exceed the benefit
What is macroeconomy? (income/employment, prices)
a nation’s overall levels of income, employment, and prices are determined by the interaction of spending/production decisions made by those in the economy
What is unemployment/inflation?
imposes costs on individuals/imposes cost on many people and can benefit some through the redistribution of purchasing power
What is monetary and fiscal policy?
federal government budgetary policy and the federal reserve monetary policy influence the overall levels of employment, output, and prices
