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economy
means scarcity (military vs consumer goods, spend vs save for later, unemployment vs inflation, equality vs health)
free market
allocates resources through the decisions of households and firms
unregulated markets
markets are usually a good way to organize economic activity. To determine how many goods to produce, how to produce, and (perhaps) who gets them
central planning
(like socialism) typically fails
capitalism
can fail
markets
may not materialize or work if government institutions are not established (can fail under specific decisions)
capitalism
may generate excessive inequality
congress
can pass tax cuts or spending increases
President can veto
the federal reserve
The central banking system of the United States regulates monetary policy. ( can increase the money supply and control inflation)
politicians
tend to overspend and under tax
sum of deficits
over time = national debt
Protechunits
policies such as import tariffs or quotes
central planning
determines, how what, and for whom.
goods and services
(the output) are produced using the factors of production(the inputs or resources)
labor
factor of production, is the mental physical ability of the workforce
physical capitol
factor of production, manufactured items used to produce other goods and services
national recourse
factor of production, including mineral deposits oil, natural gas
PPF
is a diagram that shows the combination of two goods that are possible for a society to produce at full employment
opportunity cost
is what you give up when you make a choice
economic growth
An increase in factors of production: resources, such as labor and capital, used to produce goods and services. An increase in the productivity of the factors of production: through better tech, education, health care, trade. The government spends more than its taxes, it is a budget deficit
