Study sets, textbooks, questions
Upgrade to remove ads
Economics Test #1
Terms in this set (53)
anything used to make something else
not enough of everything
What is the difference between a need and a want?
need-something you need to live; want-luxury that makes you happy
Why is it necessary to make decisions regarding how you use resources?
because you don't want to waste materials on stupid things so that there are less for everyone
making the best use of limited resources
one who buys or uses
What does it mean to waste something?
wasting is when you don't use resource to best of its ability
Is waste a good or bad thing?
bad thing because you could make good of the few resources we have by being efficient, not wasteful
item for sale that can be touched
work done for someone else
Why do younger people purchase more goods than services?
because we don't have as many goods yet that we need services to take care of...we're starting to build up an inventory of goods
Do you think goods or services are more important to the economy? Why?
goods are more important because they're unpredictable whereas services are reliable...need to pay attention to goods
What might you need to consider when deciding to buy goods to DIY or hire a service?
what is given up when we purchase a good or service
Why does opportunity cost exist?
because not everybody can have everything so you need to choose which one is more important
more goods available, so prices go down
less goods available, so prices go up
amount of supply for which there is no demand
Why do sellers need to consider supply and demand when setting their prices?
so that they will get the most likely sales possible
How do supply and demand affect the price of a good?
raise or lower prices and increase or decrease popularity and people's thoughts of products/services
trading one kind of goods for another
a letter of credit
the question you ask when you borrow money from the bank
when paper money is backed by gold
inconvertible paper money made legal tender by a government decree
it must be accepted in payment of debt
when banks are given permission by the government to operate
when many depositors rush to the bank to withdraw funds
a loan that is repaid by the installer in regular installments
discount rate charged by Federal Reserve
persuasion tactic used to influence banks to adhere to policy
What are the five problems with the barter system?
1. no set standard for valuing labor and items when barter was used
2. finding someone who had what you wanted and who was willing to trade for what you had to barter
3. difficulty with the barter system involved ease of transporting and transferring
4. when people try to barter labor for land, often landowner didn't need it
5. barter makes it difficult to arrive at a contract or written agreement
What does there need to be in order for money to work?
medium of exchange-willingness to accept money in return for goods and services
Does our modern money have intrinsic value? Why or why not?
no; because you can't wear them, use them as shelter, eat them, or use them for paper because they're green and printed
What allowed the economy to change from a barter to a monetary economy? When did this change take place?
when banks started to build up, because people didn't have to carry their bills around and so people were more willing to deal with paper bills
How did travelers overcome the dangers of a monetary economy?
invested money in banking
How do banks make money?
charged interest on loans they gave out
Why does fiat money have value?
because government issuing says it has value
How did Iran give US currency a bad reputation?
-Iran started making counterfeit money and buying goods with it
Why are runs bad? How does the US prevent these problems today?
because people would take out all their money, meaning banks had no money to loan...Federal Reserve was set up that studied banking reforms
Why do people loan money to developing countries even though they know it might never get paid back?
because you're being speculative...if they make money, maybe you could make money
Why do people take out loans even though they have to pay back more than they borrowed?
might have emergency situation...if need to get certain expensive goods and it is impossible to pay it upfront
What are the five ways the Federal Reserve System regulates the supply of money?
1. provides its member banks with currency as needed
2. holding reserves for member banks
3. audit member banks
4. clearing checks
5. safety for excess deposits loaned from one bank to another
Person on the $1 bill.
Person on the $2 bill.
Person on the $5 bill.
Person on the $10 bill.
Person on the $20 bill.
Person on the $50 bill.
Ulysses S. Grant
Person on the $100 bill.
LOOK AT BE ABLE TO'S
people on bills
50-ulysses s. grant
Sets with similar terms
3rd Grade, My World Social Studies: Chap…
Luis Finance Terms
Other sets by this creator
Econ Exam 2
ACCT 225 Final