Economics Lecture Review Flashcards

A comprehensive set of vocabulary-style flashcards covering key economic concepts, market structures, and financial principles from the lecture notes.

Aggregate

In economic terms, this word means total.

An example of a public good, in an economic context, is

National defense spending

Monopolistic Competition (Non-characteristic)

No market power among individual firms is NOT a characteristic of this market structure.

Substitutes

One of the reasons consumers choose these is that they are relatively cheaper.

Absolute Advantage

Being able to make something using fewer resources than other producers require.

Mixed Economies

The classification for most economies in the world today.

Resource Complements

A pair of resources used together, such as cab drivers and cabs.

Invisible Hand

The mechanism by which market forces coordinate production according to Adam Smith.

Resource Demand Curve

A curve that slopes downward.

Opportunity Cost (Decision)

The type of decision you make when considering the extra time and extra calories of having dessert.

Collateral

Indicated when a person owns a house to help him or her obtain a loan.

Labor Market (Benefits)

The result when more businesses provide health insurance, leading to an increase in the quantity of labor demanded.

Foreign Nations

The entities from which Americans buy the difference if U.S. production falls short of consumption.

Capital Goods

Productive resources that include factories, tools, trucks, machines, and computers.

Perfectly Competitive Market (Farmers)

A market where the amount one producer sells has no effect on the market price.

Manager with Professional Degree ($45$-year-old)

The type of worker at a manufacturing company likely to earn the most.

Consumer Price Index (CPI)

Measures changes over time in the cost of a fixed market basket of goods and services purchased by a typical family.

Index Mutual Fund

A fund that might purchase only stocks in the $500$ largest corporations in the United States.

Monopoly

Increased consumer surplus is NOT considered a problem with this market structure.

Law of Diminishing Marginal Utility

The economic principle at work when you only purchase succeeding slices of pizza if they cost less.

Partnership

A business structure that ends when one partner dies or leaves the business.

Price Decrease

Leads to a producer becoming less willing and less able to supply a good.

Individual Stockholder

An owner who has little say in a firm’s operation.

Opportunity Cost (Definition)

The value of the best alternative you must pass up when choosing an item or activity.

Capital ($3$ Cs of Credit)

The value of the things you own that could be sold or cashed in to repay a loan.

Property Taxes

Taxes that make up a large portion of revenue for local levels of government.

Underemployed

A worker, such as a mother selling cosmetics part-time during school hours, who is not working to full capacity.

Copyright

Protects the intellectual property rights of a song writer.

Price Increase (Supply Curve Response)

Resulting movement along the supply curve and an increase in quantity supplied.

Aggregate Expenditure

The sum of consumption, investment, government purchases, and net exports.

Underground Economy

Production that takes place when income, such as $10$ for watching a neighbor's baby, is not reported.

Human Capital (Earnings)

The reason surgeons typically earn more than barbers. (the collective economic value of a worker's or population's knowledge, skills, experience, and health)

Recession

A decline in total production lasting at least six months.

U.S. Gross Domestic Product (Exclusion)

Includes all production in the U.S. except items like a car produced by General Motors in a plant in Mexico.

Wage Rate Differences (Non-factor)

Workers' needs are NOT a reason why these rates differ.

Price Floor

Must be set above the equilibrium price in order to have an effect.

Economic System

The set of mechanisms and institutions that resolves the questions of what, how, and for whom.

Umbrella Policy

Additional insurance purchased to increase liability protection to $1 million$ or $2 million$.

Scarcity

Arises because all societies have limited productive resources to satisfy unlimited wants.

Commodity

An example of this is a bushel of wheat.

Pizza Demand Shift

Causes the supply curve for pizza to shift to the right.

Supply Curve Leftward Shift

Increases price but reduces the quantity as long as the demand curve slopes downward.

Identity Theft Action

A victim should take all available recommended actions if this occurs.

Budget Worksheet (Exclusion)

A planning document that should contain various items except expected taxes.

Households

The most important economic decision maker in market economies.

Benefits-received Principle Tax

An example is a fee charged to enter a national park.

Supply Determinant (Exclusion)

Consumer expectations are NOT a determinant of this.

Production Possibilities Frontier

A change in the inflation rate is not a factor that could shift this curve.

Budget Review

An activity you should perform at least once every month.

Loan Supply Shift

A movement that would reduce the interest rate.

Secured Loan

A type of loan typically represented by borrowing to buy a home.

Price Ceiling

A government-imposed limit such as rent-controlled housing prices.

Right-to-work Law

A law that reduces union membership.

Price Below Equilibrium

Results in a shortage that will force the price to rise.

United States Economy

An economy described as a mixed economy.

Demand Reduction

An increase in consumer income does NOT reduce demand.

Oligopoly

A market structure comprised of a few firms.

Personal Insurance

An example is term life insurance.

Local Government Revenue

Property taxes provide the largest source of revenue for these entities.

Law of Supply

States that the quantity of a good supplied is usually directly related to its price.

Pure Command Economy (Non-feature)

A system where competition is NOT encouraged.

Specialization

Occurs when individual workers focus on single tasks.

Law of Diminishing Marginal Utility

If Sandra pays $50$ for one sweater, the value of a second sweater to her will be less than $50$.

Product Safety

The best way to protect yourself from defective items is to use your own common sense.

Union Members

About half of all these workers are government workers.

Credit History

A person’s record of paying bills and debts over time.

Cartels

Groups that usually earn more profit compared with competing firms.

Social Insurance Program

A program such as Medicare.

Union Wage Advantage

The finding that union members earn roughly $10\%$ more than similarly qualified nonunion workers.

Housing Market (Population Increase)

A situation that would shift the demand curve to the right.

Private vs. Publicly Traded Corporation

Distinction based on whether stock is issued to a small group or anyone who chooses to buy shares.

Credit Card Fees

An aspect of credit where many cards actually charge no annual fee.

Supply-side Economic Policy ($1981$)

Policy implemented by President Ronald Reagan that involved reducing personal income tax.

Monetary Policy

The process involved in regulating the money supply.

Comprehensive Insurance

Insurance that helps pay for a replacement if a car is destroyed by fire rather than a traffic accident.

Seasonally Unemployed

A construction worker who cannot find employment in February.

Troubled Asset Relief Program (TARP)

A program intended to stabilize banks.

Elasticity

Another word for responsiveness in economic terms.

Business Borrowing (Non-purpose)

Usually not done for the purpose of offering lower prices to consumers.

Rational Consumer Choice

A choice that results in the greatest possible satisfaction per dollar spent.

Long-term Goal

Completing an accounting degree is an example of this.

U.S. GDP (Toyota)

The value of a Toyota car produced in the United States is counted as part of this.

Future Value ($200$ at $5\%$, $1$ year)

The end value of this certificate of deposit is $210$.

PPF (Inefficient Points)

Points located inside the production possibilities frontier.

Union Labor Demand (Campaign Shift)

The demand curve shifts to the right if an American union convinces consumers to buy American-made products.

Credit Card Interest Rates (Reasoning)

These are generally higher because the company does not require collateral on the debt.

Personal Loans

The type of loan where interest rates tend to be highest.

Term Life Insurance (Youth)

A type of life insurance young people can purchase at a relatively low cost.

Profit per T-shirt ($3.75$ revenue, $1.50$ cost)

The calculation resulting in $2.25$ per unit.

Perfect Competition Firms (Profit Variation)

Firms in this structure do NOT all earn the same profit per item sold.

Leftward Shift of Supply Curve

Indicates a decrease in supply.

Laissez-faire

The doctrine supported by Adam Smith’s description of the invisible hand.

Innovation

The process of turning an invention into a marketable product.

Horizontal Merger

A joining of Ford, Daimler-Chrysler, and General Motors to form a single firm. (occurs when two companies that operate in the same industry and at the same stage of the supply chain combine.)

Perfect Competition (Non-feature: Products)

Differentiated products are NOT a feature of this market structure.

Recession Conclusion

Drawn from headlines showing down national orders, workers laid off, and households cutting spending.

Corporation Owner

A firm's stockholders.

Bonds

A type of investment that is generally less risky compared to stocks.

Double Counting

A problem avoided by excluding intermediate goods and services from gross domestic product.

Government Protection Limits

Consumers should not expect protection in every transaction because there are too many for the government to be involved in all of them.