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Economics Final Exam
Terms in this set (81)
Law of Supply
As a price increases the quantity of the good provided increases, as the price of a good decreases, the number provided decreases.
Law of Demand
Consumers buy more of a good when its price decreases and less when its price increases.
A situation in which quantity supplied is greater than quantity demanded
A situation in which quantity demanded is greater than quantity supplied
a situation in which the market price has reached the level at which quaniity supplied equals quanity demmanded
A market structure in which a large number of firms all produce the same product. The market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product
A market situation in which a small number of sellers constitutes the entire industry. It is competition among the few.
..., A firm that is the sole seller of a product without close substitutes
..., A national banking system, established in 1913, that controls the U.S. money supply and the availability of credit in the country.
chairman of the Federal Reserve
taxes & government spending
Open market operations, discount rate, reserve requirements
A business owned and managed by a single individual
A business in which two or more people
A business owned by stockholders who share in its profits but are not personally responsible for its debts
Diminishing Marginal Utility
..., As the quantity of a good consumed increases the extra satisfaction gained decreases
Factors of Production
Land, labor, capital, & entrepreneurship
Expansionary Monetary Policy
Federal Reserve system actions to increase the money supply, lower interest rates, and expand real GDP
Contractionary Monetary Policy
The Federal Reserve's adjusting the money supply to increase interest rates to reduce inflation
Expansionary Fiscal Policy
An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing demand and expanding real output
Contractionary Fisical Policy
A restriction on demand pull inflation, a decrease in goverment spending or increase in taxes to reduce demand pull inflation
A distribution to corporate shareholders of corporate profits
A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
Mismatch between the skills of workers and job requirements
Unemployment that rises during economic downturns and falls when the economy improves
Is the study of how people use their limited resources to satisfy their unlimited wants
A document granting an inventor sole rights to an invention
Gross Domestic Product
The total dollar value of all finished goods and services produced in a country during a given year; C + I + G + F...consumption + business investments + government spending + net exports
Giving up one thing in return for another in the decision-making process.
Combination of two or more companies into a single firm
A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate; loans
money used by a company to purchase a variety of stocks, bonds or money market instruments. Provides diversification and professional management for investors.
Buying several different investment alternatives to spread the risk of investing.
A tax for which the percentage of income paid in taxes increases as income increases
A tax in which the burden falls relatively more heavily on low-income groups than on wealthy taxpayers.
A tax for which high-income and low-income taxpayers pay the same tax rate
market consists of one seller, product has no close substitutions, prices high, barriers to entry high
market has few sellers who control about 70% of the market and sell identical or slightly different products
sellers competing with same products; keeps prices low
economy of scale
the bigger a company gets, the lower the operating cost (they can buy products for cheaper)
when a company does something costly in order to increase output temporarily; cost goes up on short notice
a company does something costly (like build an addition) in order to lower the cost in the long run; time to expand
each country is undeniably better at producing one product
one country produces two products better than another; however, so as to not run out of resources, each country makes what they are best at
dollar cost averaging
investing the same amount of money on a regular basis to prevent from investing at the wrong time
selling your stock and either losing money or making a profit
companies split so that individuals can afford to buy stock
Dow Jones Industrial Average
average of 30 significant companies' stocks traded on the NYSE
how you invested your money throughout your lifetime in order to live comfortably after retiring
when people are only employed during certain parts of the year
workers that are not accurately represented in official unemployment statistics
condition in which virtually all who are able to work are working; 5.2% and under
product for a price
service for a price
having limited resources and unlimited wants
what you give up; alternative
in order to produce two goods, one must be produced more and one must be produced less; trade off
Three Economic Questions
1. What goods and services are produced?
2. How are goods and services produced?
3. Who consumes the goods and services?
system of production, resource allocation, exchange, and distribution of goods and services
economic system where decisions are made by the people with little government involvement
economic system where the decisions are made by the central government
economic system where customs, beliefs, and traditions run the economy
security, stability, growth, freedom, efficiency, equity
wants, not necessities
items necessary for survival
caused by non-price changes
caused by price changes
where supply equals demand
items that can be used in replacement of another
items that typically go along with another item
additional satisfaction a consumer gains from one or more good or service
when more money is in the economy, causing the value of the dollar to go down and prices to go up
displays an inverse relationship between inflation and unemployment
relationship between rising wages and prices (inflation); suggesting that more disposable income leads to an increase in prices
consumer price index
variation in prices paid by consumers
M x V = P x Q
money x velocity = price x quantity
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