Economics Flashcards

Flashcards for economics review

What is the focus of Macroeconomics?

A country's overall economy

What is the focus of Microeconomics?

Consumers, families, and businesses

What is fiscal policy?

Taxation and spending decisions designed to encourage growth, boost employment, and curb inflation

What is monetary policy?

Actions that shape the economy by influencing interest rates and the supply of money, controlled by the Bank of Canada

What does the M1 money supply include?

All currency (paper bills and metal coins) plus chequing accounts and traveller's cheques

What does the M2 money supply include?

All M1 plus most savings accounts, money market accounts, and certificates of deposit

What are the key functions of the Bank of Canada?

Manages Canada's monetary policy, provides banking services, coordinates cheque-clearing, maintains the federal government's chequing account, and keeps the currency supply in good condition

What does a free market consist of?

Private ownership, economic freedom, fair competition, and innovation and hard work

What are the fundamental rights of capitalism?

The right to own a business and keep after-tax profits, the right to private property, the right to free choice, and the right to fair competition

What are the 4 degrees of competition?

Pure competition, Monopolistic competition, Oligopoly, Monopoly

What does supply refer to in economics?

The relationship between the price of a good and the quantity that sellers are willing and able to offer for sale. Sellers tend to supply a greater quantity as the price rises.

What is a supply curve?

A graph of the supply relationship which slopes upward to the right showing that the quantity supplied increases as the price rises

What does demand refer to in economics?

The relationship between the price of a good and the quantity buyers are willing and can afford to buy; when price falls, consumers tend to buy more

What is a demand curve?

A graph of the demand relationship which slopes downward showing that the quantity demanded increases as the price falls

What is equilibrium price?

The point where supply and demand intersect; market price adjusts to the equilibrium price

What is socialism?

The government controls key enterprises; higher taxes designed to distribute wealth through society

What is communism?

Public ownership of all enterprise; strong central government

What are some measures used to evaluate economic performance?

Gross Domestic Product, Employment Level, The Business Cycle, Price Levels, Productivity

What are the stages of the Business Cycle?

Peak, Contraction, Trough, and Expansion

What is inflation?

When average prices increase and the rate of price changes across the economy increase.

What is hyperinflation?

When average prices increase more than 50% per month.

What is disinflation?

When price increases slow down.

What is deflation?

When average prices actually decrease.

What is productivity?

The relationship between inputs and outputs.