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Terms in this set (88)
Scarcity is defined as a lack of _____ to satisfy wants.
The following is an example of entrepreneurship...
A scientist invents a long-lasting paint and sells it to a large manufacturer
The 4 factors of production are
land, labor, capital, entrepreneurship
Physical capital consist of
machines, tools, equipment used to make other products
The assumption of rational self interest means
people generally think of themselves when making choices
Define Opportunity Cost
The next best alternative given up when making a choice
List 3 Economic Q's
What goods and services to produce?
How should goods and services be produced?
For whom will goods and services be produced?
The study of the economy as a whole
In the circular flow model households...
Supply to the resource market and demand from the product market
When the potential for profit rises, so does the potential for...
More variety, better products, and lower prices
Characteristics of a free market economy
Competition, Rational self interest, ownership, risk vs profit, low unemployment and slow population growth, and high GDP, high literacy rates
In a pure market economy, who answers the three economic questions?
Shared resources and decisions between the government and individuals is what type of economy?
This type of system would most likely experience monopolies
is the study of economics in regards to individuals
Items of value that can be seen and touched
Items of value that cannot be seen or touched
Tax on imports
Restriction on number of imports
International trade left to its natural course without tariffs, quotas, or other restrictions
Uses less resources
The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service
Company takes advantage of low opportunity cost
An excess of imports over exports
Exports exceed imports
Gross Domestic Product measures goods and services produced in the country in one year (no taxes)
Consumer Price Index tracks inflation/measures price of fixed 'basket' of goods over time
The stages that the economy goes through
Turning point of expansion
Economy not doing as well
Turning point of contraction
Economy is growing
New York Stock Exchange
A stock exchange based in NYC that has the largest equities based exchange
Securities and Exchange Comission
Regulates stock market and protects investors
Global electronic marketplace for securities, index for US technology stocks
Charge for borrowing money/ Amount of ownership a stockholder has in a company
Type of security that shows ownership in a company
Investor loans money to thing and gets interest back
Distribution of a portion of a company's earnings to shareholders
Property or other assets that borrower offers to lender to secure loans
An installment loan is a loan that is repaid over time with a set number of scheduled payments
Backed by collateral
A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral
A small, short-term unsecured loan
Provides info on a potential loan applicant
3 C's of Credit
Capital, Character, Capacity
An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets
A debt security issued by a corporation and sold to investors, payed back by money to be earned from future operations
Money Market Account
Pays a higher interest rate than a savings account
Percent change in rising prices
Number of people not working
Between jobs, 'temporarily' unemployed
Doesn't have transferable skills
Due to recession
Due to time of year and nature of job
Law of Demand
As price goes up, demand falls and as price falls, demand goes up
Law of Diminishing Marginal Utility
A law of economics that states a person gets less satisfaction each time they use a product
Determinants of Demand
Tastes and Preferences, Number of Consumers, Price of Related Goods, Income, and Future Expectations
When one person or business is the only one in the industry
What two tools are used to create Fiscal Policy?
Government spending and taxes
Who uses these Fiscal Policy tools?
What three tools are used to create Monetary Policy?
Affect money supply, reserve requirements, discount rate
Who uses these Monetary Policy tools?
The Federal Reserve
What three things are Monetary and Fiscal Policies attempting to control?
Inflation, unemployment, output of economy
Adam Smith was a ____ Economist who wrote the famous Economics book titled "_____". The major concept that he gave the economics world was "The ____ _____", which means that if everyone acted in his/her own _____ _____-____, then ________________________.
Classical, "Wealth of Nations", "The Invisible Hand", enlightened self-interest, the economy will be stable
The Fed can use ____ monetary policy to speed up economic growth.
The Fed can use ____ monetary policy to slow down rapid growth in order to control inflation.
12 member group, buys and sells securities
Quantities of goods consumers are willing and able to buy
Quantities of goods sellers are willing and able to sell
Law of Supply
As price goes down, sellers are less willing to supply product
5 Shifters of Demand
Tastes and Preferences
Number of Consumers
Price of Related Goods
Government payment to a business
North American Free Trade Agreement -removes trade barriers between US Canada and Mexico
Cost Push Inflation
Stems from increase in cost of resources
Min price set by government
A decline in a nation's output accompanied by high inflation
Theory that the economy is self-correcting
Zero Sum Game
Only way to make money is for others to lose the same amount
TV signal is not an example
Dominated by a few large sellers
Perfectly Competitive Market
Many buyers, standardized products, ease of entry
The study of the economy as a whole
A max price set by the government
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