Studied by 38 people
three types of unemployment
cyclincial: relating to the economy, lay offs
structure: not qualified, lack of skills
frictional: people quit to find better jobs
estate Tax
death tax; assesssed on a person follwing death
father of economics and the author of “Wealth of Nations”
Adam Smith
example of american export
refined petroleum
in the U.S, all citizens participate in the economy
voting
define economics
study of production, distribution, and consumption of goods and services
define human capital
knowledge of skills and health that people invest in and accumulate throughout their lives
what questions must every economic system address
what will be produced? how will it be produced? who is distributing receiving?
why are natural resources limited?
they can’t be man made
you go to a restaurant and order a veggie sandwich on wheat bread. The water that a the farmer used to irrigate the wheat and vegetables is best categorized as which factor of production?
land
entrepreneaurs
do all the factors of production
over spring break, you fly to Daytona Beach, Florida and stay in a hotel. Once there you must decide whether to spend an afternoon swimming or sailing. the opportunity cost of sailing includes
the cost of you swimming instead
an example of an American export is a
refined petroleum
Kate has saved $180. The total cost of the items she wants to purchase comes to $200. What basic economic fact does this situation illustrate?
shortage; she doesn’t have enough money
the President proposes reducing military spending in order to make money available for new healthcare programs for young children. this is a classic example of
a “guns or butter” trade-off; spending on defense programs versus social programs
will produces baseballs and softballs. In one hour he can produce 10 baseballs or he can produce 2 softballs. will's opportunity cost of producing 1 softball is how many baseballs
if Will produces 1 softball he is losing out on producing 5 baseballs
what economic system is characterized by government ownership of part of the major production industries and freedom of job choice for workers?
socialism: social and economic doctrine that espouses public over private ownership of property and natural resources.
a. unattainable.
b. attainable and has full (efficient) employment of resources.
c. attainable and has less than full (inefficient) employment of resources.
d. unattainable and has less than full (inefficient) employment of resources.
e. more information is needed to determine if the point is attainable or not.
b. attainable and has full (efficient) employment of resources.
the figure above shows the production possibilities frontier for a country. a combination of 4 million gallons of milk and 4 million gallons of ice cream is
a. unattainable now, but could be possible in the future.
b. attainable and has full (efficient) employment of all resources.
c. attainable and has less than full employment (inefficient) of all resources.
d. unattainable because it has less than full (inefficient) employment of all resources.
e. more information is needed to determine if the point is attainable or not
c. attainable and has less than full employment (inefficient) of all resources.
to calculate profits, a firm subtracts total costs from total revenues. what makes up the firm’s production costs?
fixed and variable costs like rent and materials
the United States has what kind of economy?
mixed economy including socialism and capitalism
the "law of demand" refers to the fact that, other things remaining the same, when the PRICE of a good rises,
the quantity demanded goes down**
according to the law of supply, the higher the price,
higher quantity supplied**
a sandwich shop lowers the price of tuna sandwiches. The shop suddenly sells more tuna sandwiches than usual. What economic concept does this sales show?
law of demand
consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, what will happen to Apple computers?
if the price of a Dell computer decreases, apple computers will
lose sales**
if macaroni and cheese is an inferior good, then a decrease in income results in
increase in demand for mac n cheese; inferior goods are “store brand” goods
shift to the right means increase in demand at the same price
shift to the left means decrease in demand at the same price.
a product that can be used to replace the purchase of similar products when prices rise is a
substitution
a product that is commonly used with other products
complementry goods
picture the inside of a grocery store, with many shoppers buying many goods. The market for groceries is at equilibrium. What does that mean?
that the price and quantity are equal. where the desires of consumers and the desire of producers agree. a state in which market supply and demand balance each other
$25
the supply will go up while demand goes down. This creates surplus
it will become cheap and the demand for that good will increase.
an increase in demand will cause the equilibrium price to fall
Many clothing companies compete for your business. To convince you to buy its brand, one store uses advertising and promises excellent customer service. What are these actions an example of?
marking and advertizing
the principle that states that the more you have of something, the less satisfaction you will get from an additional unit is the
the law of diminishing marginal utility
the idea that you get less enjoyment as you consume more of something is
the law of diminishing marginal utility
if demand for a product is very elastic, it means what?
the change in quantity demanded due to a change in price is large. A small change in price will have a large impact on the quantity supplied
when a surplus exists, there is a tendency for buyers to do what with prices?
when there is a surplus, it calls for lower prices until the surplus goes away
economic profit equals the firm's total revenue minus the
Profit = total revenue - total cost
total revenue is defined as what formula
Total revenue = Price x Quantity
business organization legally distinct from its owners and treated as if it were an individual
corporation: legal entity created by individuals, stockholders, operating for profit.
when one firm sells a good or service that has no close substitutes and a barrier blocks the entry of new firms, what type of market is this?
monopoly: consists of one firm that produces a unique product or service with no close substitutes. One single seller or producer.
in a perfectly competitive market, how do farmers compete if they have barley?
they sell it to higher paying consumers**
gives authors, musicians, and artists exclusive rights to publish, duplicate, perform, display, and sell their creative works
U.S copyright law
what did Adam Smith’s “invisible hand’ theory symbolize?
the unseen forces that move the free market economy.
give 3 examples how the government takes part in the United States economy to
collect social security taxes, provide public goods and services, and redistribute income.
what program does the US spend much/most of its discretionary spending on?
the national defense program
a tax placed on the assets of a person who has died
estate tax
Gross Domestic Product measures the
GDP measures the monetary value of final goods and services
people who live on fixed incomes are _______ by inflation.
they suffer from inflation because their income does not increase as fast as their rent
a person is considered unemployed if the person
does Not have a job, unavailable to work, ect
how would you best describe a manufacturing employee who has been fired because he was replaced by a robot (new technology) and does not have the skills necessary to help operate the robot?
structure unemployment
what are the three functions of money?
store of value, unit of account, and medium of exchange
when you pay a cashier at a store for a new pair of shoes, you are using your money as
a medium of exchange
before going on a cross-country trip, you take money out of the bank and put it in your wallet, intending to buy souvenirs when you arrive at your destination. Which characteristics of money does this action best demonstrate?
portability and acceptability
the word "fiat" is
fiat means ‘let it be done’
“this note is legal tender for all debts, public and private.” these words on a dollar bill indicate that the bill is
legal. that the U.S government protects my right to pay with this dollar.
the three C’s of credit are
character, capital/collateral, and capacity
type of payment that remains the same from month to month
fixed expenses are rent, car payment, ect.
the chairman of the Federal Reserve Board today is
Jerome Powell
who has authority over the Federal Reserve?
the board of governors. 7 members.
the Federal Deposit Insurance Corporation (FDIC) insures whom?
FDIC insures deposits, they protect depositors who deposit money.
which word best describes something bought for future financial benefit?
an asset or investment
why might you choose an investment with high risk instead of one with low risk?
you are able to make more money during high risks than low risks
the main purpose of the FDIC is to make sure that
protects you against the loss of your insured deposits if an insured bank fails
if the Fed lowers the required reserve ratio, the quantity of money will
it will lower the amount of cash that banks are required to hold in reserves
Note 
Flashcard (100)