Honor Economic Unit 1 Test; The Basics of Economics

What is a commercial Bank?

accepts deposits, offers, checking account services, various loans, offers basic financial products, like certificates of deposits (CD’s)/ mutual funds

What kind of services do commercial banks offer?

Certificates of deposit (CD’s)/ mutual funds

What is a credit union?

type of financial cooperative that provides traditional banking services, ranging in size from small, volunteer-only operations to large entities.

what are three examples of commercial banks?

Bank of America

Citibank

Chase Bank

List 3 examples of credit unions?

Edward’s Federal Credit Union

Welcomed Credit Union

Northrop Grumman Federal Union

Logic Federal Credit Union

What are deposit accounts?

accounts that let you add money to the account

what is the difference between a checking and a savings account?

checking- regular expenses

saving- saving for emergencies/ something you really want

what is the lowest credit points you can have?

400

what should you maintain your credit score at?

750-800

What does a debit card let you do?

Deposit cash into and withdraw it from your checking account

what does credit allow you to do?

loans, student loans, (best way to bring up your credit score), consumer installment

why do you need to watch gimmicks on credit?

some banks have “mini games” to keep you using your credit card

Economics is the study of…

how people make choices to satisfy their wants and mainly their needs best.

define opportunity cost

can be simply defined as what we give up to get something else

Resources might be described as…

potential opportunity costs, things we might give up to get something else

define trade-offs

all alternatives given up when choosing one action over another

define relationship between individuals and trade-offs

decide what is important to personal needs

define relationship between business and trade-offs

companies having to give up something

define relationship between society and trade-offs

decisions here can avoid wars or cause riots in the streets

what does it mean when you are thinking at the margin?

when you decide how much more or less to do

(goods and services) define goods

physical objects such as shoes, shirts, or i-pods

(goods and services) define services

Actions or activities that one person performs for one another (haircuts or dental checkup)

Define factor of production (land, labor, capital, entrepreneurship)

once we decide to use a resource to make something else

define Land

all natural resources used to produce good/ services (farms, coal, water, forest)

Define Labor

efforts a person devotes to a task→ person is paid

define Capital

any human =-made resource that is used to create other goods and services

Define Entrepreneurship

ambitious leaders decide to combine land, labor, and capital resources to create good/ services (Bill Gates of Microsoft, Henry Ford)

What goods and services should be produced?

Societies need to decide what to produce to satisfy needs and wants. How many resources need to be used on defense, education, public health, consumer goods.

How should these goods and services be produced?

This question can be the most important. The countries of the world need to balance their resources carefully so they are not all used up on a few needs and wants

Who consumes these goods and services?

Once the items are produced a society must determine who receives these items. Example might be during times of war the army may get more goods than the regular population

economic efficiency

making most of resources

economic freedom

freedom from government interaction in production/ distribution of goods/ services

economic growth

societies pursue additional goods, such as environmental protection

economic equity

fair distribution of wealth

traditional economies

rely on habit, custom or ritual to decode what to produce, how to produce it, whom to distribute to

Mixed economies

systems combine tradition and free market w/ limited gov intervention

authoritarian economy

questions left to leaders, people make things they’re told

market economy

difficult to understand or authority to answer economic questions, how do we decide what to make

what does a production possibilities graph show?

alternative ways that an economy can use its resources

Production possibilities frontier is what?

the line that shows the max possible output of that economy.

Moving to point C, with all our specialized watermelon resources already being used, we must give up lots of shoes to get watermelons like at point D. In other words,

the more watermelons we produce, the greater the opportunity cost. This is because our resources are specialized

Label all terms. Important!!

Growth (see above)

as shown above, if more resources became available, or if technology improves, an economy can increase its level of output and grow. When this happens the entire production possibilities curve “shifts to the right”

Cost (see labeled on image)

a production possibilities graph shows the cost of producing more of one item. To move from point C to Point D on this graph has a cost of 3 million paires of shoes.

define over utilization

no more product (you’ve used it all up)