41 terms

Econ Final


Terms in this set (...)

Competitive Market
Many buyers and sellers, different companies' goods are very similar in quality and quantity, firms can enter and exit without difficulty
Functions of the Federal Reservve
Keep country's finances stable, stimulate growth through lower interest rates, prevent inflation by regulating money supply
Monopolistic Market Structure
Less competitive (still have many firms, but not as much as a free market)
To reduce inflation
Sell bonds
Stimulate the economy during a recession
Increase government spending
When you should start investing
Earlier so you have greater compound interest
401(k), 403 (b), IRA
Retirement accounts that grow and are not taxed
When loans might be worth the interest
When it allows for a greater income to be reached
Stock Market Investments
Work best in the long run
Effective gov't spending during recession
Increasing food stamps and unemployment benefits
Taxes over the past 60 years
Social Insurance taxes increased, but corporate and excise taxes decreased
When a few firms make up the large portion of the market
Government action to improve a market when a monopoly exists
Lower barriers to entry from foreign competition
Free Enterprise Economy
When consumers' choices determine price through the purchasing decisions they make (no government involvement in price or production determination)
Socialist Economy
When the government makes decisions concerning a few major industries like natural resource production and healthcare
Fundamental question of economics
How to us limited resources to satisfy unlimited wants
Sole proprietorship
A firm whose owner reaps all the costs and benefits of the businesses. If it loses money, the owner will suffer the losses
Where supply and demand meet
Binding Price Floor
When the government's set price is above equilibrium - a surplus occurs when more of a product is supplied than demanded
Ideal House Down Payment
10% of cost of house
Bank Savings Account
It is much safer to keep your money in a savings account as opposed to stocks or corporate bonds.
Long-Term Investment Goals
Retirement, Big-ticket purchases and Emergency funds
Budgeting Process
Includes setting financial goals, monitoring current spending patterns and comparing the budget outline to actual expenditures
Benefits of a checking account
They are safer than carrying cash, debit cards are convenient and direct deposit provides immediate access to your funds
Avoiding bank fees
To avoid bank fees, balance your checkbook.
Unwise credit card strategy
Paying only the minimum amount you owe to the credit card company.
Role of businesses in economy
Buy factors of production in the resource market.
Resource Market
Many things occur, including people getting jobs and earning money through their skills.
Business Model of Resource and Product Factors
Demonstrates the interdependent relationship between businesses and households.
Expansionary Money Supply
This can occur when banks make loans to the public.
A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in...
Describe the economic activity between 1890 - 1914
Government was more aggressively regulating businesses.
Laissez faire economics
Economic theory that does not want government regulation because the economy is capable or regulating itself through the interaction of supply and demand.
American presidents
In American politics, presidents often disagree over government involvement to help the economy.
President Obama
A president that encouraged a government led recovery plan in 2009.
President Reagan
A president that declared government involvement as the economy's biggest problem.
President Roosevelt
A president who greatly favored government involvement, championing The New Deal.
President Hoover
A president that reflected consumers and producers could solve economic problems.
Advantage of a business as a corporation
Corporations can raise money by issuing stock and borrowing money
Free Enterprise
Focuses on profit motivation
Pure Capitalism
characterized by a limited government invovlement