Midterm 1 Flashcards
(43 cards)
What happens to interest rates if inflation goes down?
- Interest rates go up.
What are some common economic Goals?
- Hight rate of growth
- Full employment
- Price Stability
- Equitable distribution of income
- Viable balance of payments
What does it mean to have a high rate of growth?
- Increase of productivity of 4 to 5%
What does it mean to have full employment?
- Suitable jobs for those looking for jobs.
What does it mean to have price stability?
- Avoiding a rapid increase or decrease in prices.
What does it mean to have equitable distribution of income?
- Progressive tax system
What is economic efficiency?
- Max output with minimum input.
What is economic freedom?
- High degree of freedom and choice.
What is economic Security?
- Provided for poor and elderly.
What are the four economic resource categories?
- Land
- Labour
- Capital
- Entrepreneurial Ability
What are assumptions made when making a diagram?
- Products, employment, production, fixed resources and fixed technology.
What is opportunity cost?
- Cost of sacrificing parts of one sector of the economy to produce more elsewhere.
Advancement in technology leads to what?
- Economic growth.
What are the economic systems?
- Market Economy
- Command System
- Mixed Economy
What are the five primary questions to economic systems?
- What to produce
- How to produce
- For whom to produce
- How the system can accommodate change
- How the system can promote growth on progress
What is command system?
- There is no private ownership of land, all decisions are according to a central planning board.
What are some important points of Market economy?
- Private ownership of property
- Private ownership of land and capital by individuals
- Private property rights
- Freedom of choice and enterprise
How does the market system answer what to produce?
- Consumer decides what should be produced.
- Causes demand of resources
How does the market system decide how to produce?
- Maximum output with minimum input and move resources to industries where out put is high.
How does the market system decide who to produce for?
- Consumer income and wages will determine who can afford to pay for resources.
How does the market system determine how to accommodate change?
- Consumer taste and preference will determine which industries need to expand and contract.
How does the market system determine how to promote growth?
- Technological advancement and capital accumulation.
What is a market?
- Place where buyers and sellers exchange goods and services.
What is a perfect competition market?
- Large number of buyers and sellers in the market.
