last Econ test

specialization

concentration of an individual, firm, or nations resources on a particular activity or production to achieve greater efficiency and productivity

automation

use of technology to perform tasks with reduced human involvement

division of labor

Indiv or groups focus on specific roles or activities to increase efficiency

economies of scale

cost advantages that companies experience when they increase business output

product differentiation

process of making a good product or service distinct from competitors to appeal to a specific target market

fixed costs

expenses that remain the same regardless of how much a company produces or sells

Explain what was developed by the McDonald’s brothers that made their fast food restaurant so efficient

speedy system. with to go packaging and an assembly line design to increase productivity

identify how ray krock was able to achieve financial gain though mcdonal’s franchise

by buying the land he gave to franchisees as it allowed him to make more money and increase control

identify and explain the one thing that ray krok believed made mcdonald’s more successful than any other fast food restaurant

he believed that product differentiation with the name McDonalds was what made them more successful- sounded like America

identify characteristics necessary for money

money must be portable durable divisible and limited in availability

identify and briefly explain the different types of money that exists

commodity money: which has alternate use fro ecnomic good

Fiat money: gets value from gov decree

representative money: can be exchanged for a commodity

specie currency: coins

identify how paper currency is different from specie money

paper currency gets it’s value from gov specie money’s value is determined by material - gold or silver

identify advantages and disadvantages of the gold standard

people felt secure and gov was limited in how much money they produced however there was limited gold stock, gold prices can fluctuate there was a political risk of failure and reserves were hurt if currency was converted

explain why us fed reserve notes try are purely fiat money

there were issues with what certain states deemed commodity money so making everything strictly fiat allowed for more continuity

Explain how a credit union is different from a commercial bank (identify it’s advantages over a national bank)

credit unions are nonprofit and more accessible commercial bank is intended for business having higher fees and interest rates Credit union is a better option as it’s less likely to have high rates

identify significance of gold reserve act of 1934 and Brenton woods agreement

GR: allowed gov to control gold available and restrict ownership of it

BWA:meant to ensure global economic stability by fixing currencies to US dollars which allowed the US to have control over the world’s gold

Explain how Nixon completely eliminated the gold standard in 1971

by suspending convertibility of dollars to gold Nixon was able to cut off all other countries from the us gold supply as it was being deleted by foreign countries

Explain why FDR declared a banking holiday when he became president

to prevent bank runs by shutting down the banks he was able to prevent withdrawals that left banks failing

Explain why the FDIC was created

to ensure deposits up to 250,000 in order to prevent another event like the Great Depression

Explain why the fed reserve board was created

to stabilize the nations banks. it developed a central bank that was able to loan money to banks in need so that money wouldn’t run out

explain significance of the FOMC and how it is different from the fed reserve board

The FOMC oversees monetary policy, looking @ buying and selling gov securities and discount rates whereas the fed reserve board oversees entirety of fed-nations bank

identify and explain the difference between the discount rate, fed funds rate, and prime rate

DR: what the FOMC charges banks to borrow from the fed

FFR: what banks charge each other

PR: the best given in some corporate and individual borrowers

define monetary policy

can either be easy or right, refers to actions taken in response to economy -it needs to expand or shrink

Briefly explain the following monetary tools of federal reserve sys

Reserve requirement

Discount rate

Open market operations

RR: how much money a bank is required to keep to keep to prevent bank failures

DR: interest rate charged by the fed on financial loans

OMO: the fed can buy or sell securities depending on what the market needs

Explain how the following are other services provided by the fed reserve sys

clearing checks '

enforcing legislation

maintaining currency and coins

irs accounts

CC: the fed does this when funds are transferred between banks (settlements)

EL: laws and regulations banks must follow

MCAC: Bureau of printing/engraving, Bureau of mint make money to be distributed

IRS: help with managing taxes