41 terms

Economics SOL Review

Economics terms
STUDY
PLAY
Scarcity
The inability to satisfy all wants at the same time. All resources and goods are limited. This requires choices to be made.
Resources
Factors of production that are used in the production of goods and services. The types of resources are natural, human, capital, and entrepreneurship.
Choice
Selecting an item from a set of possible alternatives, individuals must choose/make decisions about desired goods and services because these goods and services are limited.
Opportunity Cost
What is given up when a choice is made- the highest valued alternative forgone. Individuals must consider the value of what is given up when making a choice. (Trade-off)
Price
The amount of money exchanged for a good or service. Determined by interaction of supply and demand . determines who acquires goods and services
Incentives
Things that incite or motivate. Incentives are used to change economic behavior.
Supply and demand
1. Interaction of supply and demand determines price.
2. Demand is the amount of a good or service that consumers are willing to buy at a certain price.
3. Supply is the amount of a good or service that producers are willing and able to sell at a certain price.
Production
1. Production is the combining of human, natural, capital and entrepreneurship resources to make goods or provide services.
2. Resources available and consumer preferences determine what is produced
Consumption
1. Using goods and services.
2. Consumer preferences and price determine what is purchased.
Free market
1. Private ownership of property/resources
2. Profit
3. Competition
4. Consumer sovereignty
5. Individual choice
What are free markets
Markets which are allowed to operate without undue interference from the government
What is a private property
Individuals and businesses have the right to own personal property as well as the means of production without undue interference from the government
What is profit?
Profit consists of earnings after all expenses have been paid
What is competition
1. A Rivalry between producers/sellers of a good or service
2. results in better quality goods and services at a lower price.
What is consumer sovereignty
Consumers determine through purchases, what goods and services will be produced
Characteristics of private financial institutions
1.include banks, savings and loans, credit unions, and securities brokerages
2.receive deposits and make loans
3. encourage saving and investing by paying interest on deposits
Economic flow
1. Individual and business saving and investment provide financial capital that can be borrowed for business expansion.
2.Individuals own resources used in production, sell the resources and use the income to purchase products.
3.Businesses(consumers) buy resources, make products that are sold to individuals, other businesses and government and use the profits to buy more resources.
4. Governments use tax revenue from individuals and businesses to provide public goods and services.
Charateristics of public goods and services
1.Include such items as interstate highways, postal service, and national defense
2.Provide benefits to many simultaneously
3. Would not be available if individuals had to provide them
How governments produce public goods and services
1.Through tax revenue
2. Through borrowed funds
Ways government promotes marketplace competition
1. enforcing antitrust legislation to discourage the development of monopolies
2. Engaging in global trade
3. Supporting business start-ups
PROPRIETORSHIP (Type of business structure)
A form of business organization with one owner who takes all the risks and all the profits
PARTNERSHIP (Type of business structure)
A form of business organization with two or more owners who share the risks and the profits
CORPORATION (Type of Business Structure)
1. A form of business organization that is authorized to act as a legal person regardless of the number of owners
2. Owners share the profits
3. Owners' liability is limited to investment.
Entrepeneur
1. A person who takes a risk to produce goods and services in search of a profit
2. May establish a business according to any of the three types of organizational structures
Global Economy
Worldwide markets in which the buying and selling of goods and services by all nations takes place
Reasons states and nations trade
1.To obtain goods and services they cannot produce or produce efficiently themselves
2.To buy goods and services at a lower cost or a lower opportunity cost
3.To sell goods and services to other countries
4.To create jobs
Virginia and the United States specialize in the production of certain goods and services which promotes efficiency and growth.
IMPACT OF TECHNOLOGICAL
INNOVATIONS
1. innovations in technology (internet) contribute to the global flow of information, capital, goods and services
2. the use of such technology also lowers the cost of production
16th amendment
Authorizes Congress to tax incomes
Government tax increase
Reduces funds available for private and business spending
Government tax decrease
Increase funds for private and business spending
INCREASED GOVERNMENT BORROWING
Decreases the funds that are available for borrowing by individuals & businesses
Decreased Government Borrowing
Increases funds available for borrowing by individuals and businesses
INCREASED GOVERNMENT SPENDING
Increases demand, which may increase employment and production; May result in higher taxes
Decreased Government Spending
Reduces demand, which may result in a slowing of the economy; May result in lower taxes
FEDERAL RESERVE SYSTEM (FED)
1.The central bank of the US
2. Acts as banker's bank, issuing currency and regulating the amount of money in circulation
HOW FED SLOWS THE ECONOMY
1. Restricts the money supply- interest rates rise
2. increases the reserve requirement
3. raises the discount rate
4. sells government securities
HOW FED STIMULATES ECONOMY
1.increases the money supply- interest rates decline
2.lowers the reserve requirement
3.lowers the discount rate
4.purchases government securities
ROLE OF SELF ASSESSMENT IN CAREER
PLANNING
Career planning starts with self
assessment
ROLE OF WORK ETHIC ON CAREER SUCCESS
Employers seek employees who show strong work ethic attitudes and behaviors
PERSONAL SKILLS AND EDUCATION RELATED
To PERSONAL INCOME EARNED
Higher skill(s) and/or education level(s) generally lead to higher incomes; Supply and demand of jobs influence job income.
INFLUENCE OF PERSONAL ADVANCEMENT WITH TECHNOLOGY AND CAREER SUCCESS
Employers seek individuals who have kept pace with technological change/skills. Technological advancements create new jobs in the workplace