Economics Part B Flashcards

Economic Perspective

a method of making economic decisions by first weighing the benefits and costs associated with each measure

Scarcity

the problem that arises with limited resources and unlimited wants

Consumer Responsibility

the requirement of the consumer to know as much as possible about a product and its alternatives prior to making a purchase; if this is not done, it could prevent a customer from receiving redress if something goes wrong with something bought

Credit

a consumer, company, or government's history in paying back their debt or fulfilling their financial obligations

Debt

money owed by an individual, company, or government; if a consumer pays back a debt in a faithful and punctual fashion, it improves his credit and increases his chances of obtaining a loan

Interest

he charge a lender places on borrowed money; A lender assesses the interest as a percentage of the money owed

Opportunity Cost

the cost associated with giving up something in order to get something else; Balancing the costs and benefits is a major factor in economic decisions.

Rational Choice

behavior that is dependent upon associated benefits and costs and a decision made based on maximum benefit

Consumer Rights

the four major rights of a consumer include the rights to choose, to be safe, to be informed, and to be heard

Secured Debt

debt that is guaranteed by the thing that is purchased

Unsecured Debt

debt that is not guaranteed by anything and typically warrants a high interest rate

Federal Trade Commission (FTC)

a federal agency empowered to prevent persons or corporations from using unfair methods of competition in commerce

Food and Drug Administration (FDA)

a federal agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous food and drug products

Better Business Bureau (BBB)

A system of nongovernmental, independent, local regulatory agencies supported by local businesses that helps settle problems between customers and specific business firms

Barter System

the trading of one item to receive another item; creates a double coincidence of wants

Command Economy

an economy in which all decisions are made by the government with little to no input by the people

Communism

a form of government that stemmed from the economic ideas of Karl Marx and preaches the idea that all citizens should be equal in wealth and status

Double Coincidence of Wants

The caveat of the barter system is that in a transaction, both people must have something the other wants and be willing to give it up for that other item.

Proletariat

a French word that explains the working class as written by Karl Marx and Friedrich Engels

Subsistence Farming

farming that is done simply to feed the family of the grower and not to sell goods for a profit

Totalitarian

the rule of one person with near-complete control over the government and country; similar to dictatorship

Traditional Economic System

a system under which people within a community perform the same economic functions as their forefathers and ancestors

Consumers

the individual buyers, sellers, or traders of goods in an economic system

Market

the collective consumers within a country

Market Economy

an economic system under which the market determines the major questions of economic production and development (also known as capitalism)

Marketplace

the place where buyers and sellers go to conduct business (can be a physical or virtual place)

Mixed Economy

an economic system in which the government controls vital industries while allowing capitalist or market principles to exist in the rest of the economy, such as private ownership of business and property

Profit

the main goal of those in businesses in a market economy; the acquisition of wealth

Self-Interest

the idea that the buyer and seller both seek to satisfy the other in order to guarantee continued access to the other and that this practice will ultimately benefit society as a whole

Commerce

conducting of business

Constitutional Convention

Meeting to create a new Constitution.

Revenue Bills

any bill passed by the House of Representatives to potentially raise money for government operations

Tariff

A tax on imported goods

Tax

any measure of collecting revenue by the government from the people to help pay for various services or government actions

Bond

a form of loan that the debtor is legally responsible to repay with interest by a certain date

Department of the Treasury

a part of the federal government responsible for all things related to money, whether the creation of it or the collection of it through taxes by the U.S. government

Elastic Cause

also known as the Necessary and Proper Clause, it is the portion of the U.S. Constitution that allows the federal government to pass laws to assist in carrying out its duties

Funding at Par

taking in old bonds and reissuing them at full value

Business Cycle

a series of economic expansions and contractions

Expansion

the growth of a country's econoym and GDP

Gross Domestic Product (GDP)

the total value of all goods produced in a particular country, regardless of the national affiliation of those who own the company

Gross National Product (GNP)

the total value of all goods and services produced by citizens of a particular country, regardless of what country they do business with

National Bureau of Economic Research

an independent and private organization that tracks the actions of the business cycle

Peak

the point at which a country's GDP and economy has reached top efficiency; is immediately followed by an economic downturn

Recession

a decline in a country's economy and GDP; in the United States, a time where there is a straight decline for six months or two quarters

Trough

the point at which a country's GDP and economy have reached their lowest point; immediately followed by some type of expansion

Depositor

a person who places money in a bank

Depression

a long and severe form of a recession

Foreclosure

to take possession of one's property due to one's inability to repay a debt

Hard Currency

a form of currency such as gold or silver that is more durable than paper currency

Inflation

a rise in price due to the currency's lower value

Overspeculation

the overvaluing of property or something else

Specie Circular

an executive order requiring that the purchase of public land be made in gold or silver

Competition

the existence of rivals who are involved in the same product or service as another company

Free Enterprise System

another name for the capitalistic system; an economic system in which people have the freedom to buy and create business, controlling the factors of production; also comprised of competition and private property

Right to Choose

the right of Americans to choose what they buy and how much they spend without government pressure

Eminent Domain

the practice of the government taking private property for the public good or for public use

Private Property

the rights of Americans (or anyone) to own property and sell it for profit

Cαrtel

an international monopoly that controls and regulates a particular product, such as OPEC and the world supply of oil

Collusion

a situation in which competitors work together to artificially set prices

Legal Monopoly

the restriction of competition because of government action or law

Monopoly

an absence of competition within a particular market of a good or service

Natural Monopoly

when one company dominates by providing service that is better and/or lower-cost than that of otehr companies due to technology or other conditions

Oligopoly

an industry with few competitors and high barriers to entry

Perfect Competition

situation in which there are many possible sources for consumers to visit and purchase the same product

Pursuit of Profit

a part of the free enterprise system that provides an incentive for business owners to provide products and services

Startup

a new business created by an entrepreneur

Bank

An institution that safeguards, lends, and exchanges money

Commodity Money

Commodity such as livestock that has worth apart from its value as money

Deposits

additions of new capital (money) to an account (includes checking, savings, and time deposits)

Representative Money

money backed by a valuable item, such as gold

Security

a representation that shows ownership of a business or loan

Usury

the practice of lending money at extreme interest

Withdrawal

the removal of capital (money) from a bank

Barter

an exchange of a good or service for another good or service; depends upon a double coincidence of wants (the idea that both trading partners have something the other wants and are willing to give it up)

Currency

paper money (notes) and coins

E-cash

an electronic version of paper money

E-check

an electronic version of a paper check

Fiat Money

money that is recognized and ordered to be such by a government

M1

the total amount of money held by individuals and companies, as well as all travelers' checks and checkable deposits owned by individuals and companies

M2

M1 plus savings deposits, time deposits, money market funds, and any other type of deposits

Means of Payment

a way of paying off a debt

Medium of Exchange

one of the three functions of money; something that is accepted in return for a good or service

Money

anything that is generally accepted by a society as means of payment

Store of Value

one of the three functions of money; the ability of money to hold its value while not being spent (allows money to be saved or invested)

Unit of Account

one of the three functions of money; an agreed-upon scale of worth for goods and services

Credit Union

a member-owned financial institution that provides banking services to a particular group of people

Commercial Bank

authorized by the Comptroller of the Currency of the U.S. Department of the Treasury; a financial institution that accepts deposits and makes loans

Savings and Loan Association

a member-owned financial institution that accepts checkable and savings deposits and makes loans

Savings Bank

a financial institution that only accepts savings deposits and makes loans to individuals

Thrift Institutions

a term to describe savings and loan associations, savings banks, and credit unions

Time Deposit

a savings instrument that pays higher interest but restricts when funds may be withdrawn

Board of Governers

a seven-member panel that works to develop the monetary policy of the United States

Chair

The head of the Board of Governors of the Federal Reserve System; the spokesperson for the government on matters of monetary policy

Central Bank

the main regulatory institution in a country that manages the supply of money in an economy

Federal Open Market Committee

the policymaking arm of the Federal Reserve System that includes members of the Board of Governors and some of the presidents of the various Federal Reserve banks

Federal Reserve Districts

the twelve districts of the Fed, each with a corresponding bank that is responsible for carrying out the Fed's policies

Federal Reserve System

The central bank of the United States that dictates monetary policy and is made up of the Board of Governors, the Federal Open Market Committee, and the Federal Reserve districts and banks; informally known as " the Fed"

Monetary Policy

the regulation of the amount of money in circulation

New York Fed

the Federal Reserve bank tasked with implementing the Fed's monetary policy