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econ ch 1
Terms in this set (41)
The study of how society manages its resources. Production, distribution of goods and services.
Society has limited resources and therefore cannot produce all the goods and services people wish to have.
Society is getting the maximum benefits from its scarce resources
benefits of society are distributed uniformly among society's members
what you give up to get an item
systematically and purposefully do the best they can to achieve their objectives, given the available opportunities. Know decisions involve shads of gray and make marginal changes in decisions.
small incremental adjustments and choices to an existing plan of action. Rational people make these through marginal benefits and marginal costs.
Something that induces people to work like the prospect of punishments or reward. Role in study of economics. Rational people respond to this.
economy run by the decisions of millions of firms and households. Firms decide whom to hire and what to make. Households decide which firms to work for and what to buy with their incomes. Interact in the marketplace, where prices and self-interest guide their decisions.
COmmunist countries that decided what goods and services were produced, how much was produced, and who produced and consumed these goods and services. Also called central planning, and only government could organize economic activity in a way that promoted economic well-being for the country as a whole.
Adam Smith's Wealth of Nations
Made the famous observation that markets are guided by the invisible hand that leads them to desirable market outcomes. Prices adjust to guide these individual buyers and sellers to reach outcomes that maximize the well-being of society.
Needed in a market economy so people can control scarce resources.
A situation in which the market on its own fails to produce an efficient allocation of resources.
Impact of one person's actions on the well-being of a bystander. IE pollution.
Market failure in which a single person unduly influences market prices. If everyone needs water and one person owns a well and cant be kept in check. Not subject to competition.
The amount of goods and services produced from each unit of labor input. Leads to high standard of living. Also determines average income.
Standard of Living
Degree of wealth or material comfort to a community, determined by productivity.
Increase in the overall level of prices in the economy.
irregular and largely unpredictable fluctuations in economic activity measured by production of goods and services or number of people employed. Effected by short-run trade-off of inflation and unemployment.
Result of inflation because inflation simulates spending and demand, which causes raise in prices and production. Requires more workers and factories to make more goods/services.
House Budget Committee
committee that Spends money
Ways and Means Committee
committee that tries to find ways to raise taxes.
Deals with taxing and spending w/congress.
deals with money supply in federal reserve.
Analyzes entire economy and issues effecting it. Unemployment, inflation, economic growth, and fiscal and monetary policy. Concerned w/production/consumption/transfer of wealth.
Study of basic elements of economy, individual agents.
EVery single person is employed. Leads to inflation and people offer more pay for jobs as incentive, no unemployment.
Healthy natural rate of unemployment, but no more than usual. Healthy amount of competition. All qualified people have jobs. 5/6%
The type of economy that the US has.
Employment Act of 1945
Responsibility of economic stability or inflation is on the federal government.
Composite of 200 companies that shows direction of the economy.
money exchanged that isnt reported to the IRS
Taxes and spending
Two parts of fiscal policy
Departments of commerce and labor
Deals with unemployment
Get hired and decide what goods to buy
Hire people and decide what goods to make
representative from Wisconsin
Paul Ryan's office before VP nomination
senator from Delaware
Joe Biden's office before VP
Governor of Massachusetts
Mitt Romney's office before President nomination
Senator of Illinois
Obamas office before being elected president
The program that Paul Ryan would like to radically change or get rid of