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Terms in this set (33)
What school (or schools) of economic theory is this book based on?
The Austrian and Monetarist Schools
Where did the names for these schools of economic theory come from?
The "Austrian" School was named so because the founders of this school were from Austria. The "Monetarist" school because these economists value the quantity of money circulating in the economy.
Name the schools of economic theory and the individuals talked about in the book which represent them.
Alan Greenspan, Friedrich A. Hayek, and James M. Buchanan represent the Austrian School. The Monetarist School is represented by the late Milton Friedman.
Are coins dated after 1965 really coins? Explain.
No. Before 1965 coins were 90% fine silver.
When a coin is copper between nickel it is zinc metal.
Silver which is 90% pure.
Metal that isn't precious
When a coin contains no precious metal
When the amount of money being circulated is increased and the value of money drops.
Double digit inflation
When prices rise at the rate of ten percent or more.
Reeding is clipping notches into the edges of a coin to tell if a coin is clipped.
Reminting coins with more base metals
Spending debased coins and saving the coins with more silver (or other precious metals).
Prior to printing presses, how did the Roman government counterfeit?
First they clipped. But the Romans are smart and many people could identify which coins were clipped and which ones weren't. When the Roman government discovered this problem, they started melting down the coins and adding base-metal to them.
List three examples of supply and demand that you can identify from your own experiences.
(a) -school book edited specifically to schools need, high demand for school book,- low demand for book almost exactly like it (b) -Job at Fred Meyer, -hiring frequently, -too many people interested in one job, -persistence didn't help, -similar to grapes of wrath situation
(c)- Hostess recently went out of business after years of debt and finally declared bankruptcy. Supply went down and demand went.
Silver or gold token made of at least 90% precious metals.
Sort of like a trademark
Legal tender law
Law that protects paper money.
Legal tender money
How did dollar get its name?
The coin started out with the name Joachimthal, changed to thaler, then to daler, and finally the dollar.
What happens if someone owes you money and you refuse to accept Federal Reserve Notes for payment?
You will be punished.
Is the wage/price spiral cause of inflation or a result of inflation?
A wage/price inflation is a result of inflation
Describe what would happen with a large decrease in the supply of money.
What is the business cycle and what causes it?
The business cycle is the boom/bust cycle. Prosperity followed by a recession and then back to prosperity again.
Why would people want to trade their money away quickly?
A decline in the demand for money.
What is the term for the speed at which money changes hands?
What keeps this speed under control?
By making daily economic decisions, the people maintain this speed.
Based on Sammy's sequestration presentation, what are some of the positive and negative effects of sequestration?
Pros: Many people are affected by sequestration. There is much debate however about whether the effects are positive or negative. Cons: Many government funded programs including the Women, Infants, and Children program. It is estimated that cuts in this program alone would mean 600,000 women and children will be dropped. Others claim that with the economic forecast, the impact won't be so harsh.
In a paragraph or so, describe the three stages of inflation. Do inflations have to follow these three stages? Give examples from history to support you answer.
stage 1:people save their money. Little of the new money is being spent and prices rise vary stage 2 :money is being exchanged faster. The little money being spent is doing the work of a lot. The problem is now that prices begin to steepen faster than money is being printed. Stage 3: There is so much money in circulation and it becomes worthless because no one wants it.
List an example of America's boom and bust cycle. Explain the reason for your choice.
TY Bean Babies - -in their prime were sold as collectibles, meaning people the sold for around $5 each.promised [buyers] that they would be worth a few hundred dollars in the future. One of the biggest problems was that sellers targeted middle aged adults [mostly women]. Most of their children weren't interested in the fad. Today 97% of Beanie Babies are worth 50 cents each. The first nine original beanie babies came out in 1993. They stopped manufacturing the product in 1999,and made a small comeback in 2000.
What is M2?
M2 is defined as savings accounts, checking accounts, traveler's accounts, and mutual funds.
How do we determine the "real" M2 money supply?
Subtract the price increase
What happens when government slows the creation of real M2?
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