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Praxis II 5081 Economics
Terms in this set (57)
Considered to be the founder of ecomonics
Wealth of Nations
published in 1776; analysis of a market economy
society wants distribution of goods and services to conform with the notion of "fairness".
Classical, Keynesian,Monetary,and Neoclassical
The four general view points about the workings of markets is?
The study of the individual parts that make up the economy, includes households, business firms, and government agencies.
The study of the economy as a whole, considers inflation, unemployment, and economic growth.
Human wants and needs exceed the ability of the economy to satisfy those wants and needs.
That given a person's goals and knowledge, people take actions likely to achieve those goals and avoid actions likely to detract from those goals.
Assume that people make choices by weighing the cost and benefits of particular actions.
Division of Labor
Different members of a team of producers are given responsibility for different aspects of a production plan.
Specialization of Labor
Producers become quite apt at those aspects of production they concentrate on.
Allocative (Economic) Efficency
Occurs when society produces the types and quantities of goods and services that most satisfies its people.
When society is producing the greatest quantity of goods and services possible from its resources.
People are entitled to a share of goods and services based on what they contribute to society.
A person's contributions are irrelevant. Goods and services are distributed based on the needs of different households.
Every person is entitled to an equal share of goods and services, simply because they are a human being.
Tangible ex. food, cars, and clothing
Intangible items, ex. education, health care, and lesiure.
Refers to anything that can be used to produce goods and services.
Six categories of Resources
Land, Labor, Capital, Entrepreneurship, Technology, and Scarcity.
Law of Increasing Cost
States that as more of a good or service is produced, its opportunity cost will rise.
The relationship between the price of a product and the amount consumers are willing and able to buy.
Law of Demand
There is an inverse relationship between price and quantity demand; people will be willing and able to buy more if the product gets cheaper.
Economic assumption which means all other factors held constant.
Shows the relationship between the price and the quantity demanded.
A schedule or graph showing the relationship between the price of a product and the amount producers are willing and able to supply.
The intersection of the demand and supply curves.
Rely on custom to determine production and distribution questions. They are slow to change and found in poor Third World countries.
Rely on a central authority to make economic decesions.
The productive resources are owned by private individuals.
The productive resources are owned collectively by society and are under control of the government.
A model of economic relationships in a capitalistic market economy.
Consumers determine what is produced in the economy.
The activities of the government.
Money or in-kind items given to individuals or businesses for which the government receives no equivalent good or service in return.
Gross National Product
A measure of the dollar value of final goods and services produced by the economy over a given period time.
Alternating periods of prosperity and recession that seem to characterize all market based economies.
The high point of business activity.
Period of declining business activity.
The low point of business activity.
The period of growing business activity.
The long run direction of movement of a variable.
Anything that is generally acceptable in exchange for goods and services and in payment of debts.
Goods and services exchange directly for other goods and services.
The ease with which an asset can be transformed into spendable form.
Functions of Money
Medium of Exchange, Unit of Value, Store of Value, and Standard of Deferred Payment.
Coins and paper money.
Checking accounts held in commercial banks. Funds are transferred by means of a check.
An investment fund managed by a private financial company.
An investment fund that is managed by a commercial bank.
Organizations such as commercial banks, savings and loan institutions, credit unions, and insurance companies.
A bank's monetary holdings.
Required Reserves Rato
The amount of reserves a bank must hold. Is a number from 0 to 1.00 that determines the level of reserve holdings in relation the the bank's deposits.
The amount a bank is legally obligated to hold.
The difference between the amount of reserves a bank holds and what it is required to hold.
Federal Reserve System
To oversee the stability of the banking system and conduct monetary policy to the end of fighting inflation and unemployment and stimulating economic growth.
The interest rate the Fed charges on loans.
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