Untitled Flashcards Set

economics

The study of how people deal with scarcity, how things are made, bought, sold, and used.

economic growth

A nation's total output increasing over time.

opportunity cost

The cost of choosing one alternative over another.

nation's wealth

Determined by the accumulation of all tangible products.

scarcity

The condition where consumers wait in long lines for a new product.

paradox of value

High value of a nonessential item versus low value of an essential item.

productivity

The result of the efficient use of scarce resources.

gross domestic product (GDP)

The most comprehensive measure of a nation's wealth.

cost-benefit analysis

A helpful analysis for businesses to decide if an action is worth the cost.

production possibilities curve

Identifies all possible combinations of goods and services an economy can produce.

perfect competition

A theoretical market structure that is a goal for economies.

quantity demanded

Changes due to a change in price.

monopolistic competition

Market structure that differs from perfect competition primarily by product differentiation.

relationship between income and demand

An increase in income increases demand.

public good

An example includes services like the army.

monopoly

Market structure defined by a single producer.

market classification

Based on the number of firms, size of firms, and type of product.

substitution effect

Replacing a costly item with a less costly one.

producer behavior

High prices incentivize them to produce more.

Law of Demand

It's called 'law' because it has been repeatedly demonstrated.

Keynesian economics

Government sector can offset a decline in business spending.

equilibrium

Reached when quantity demanded equals quantity supplied.

fiscal policy

May involve taxing corporations.

oligopoly

Characterized by a few firms in a market.

sales tax

Believed to hurt the poor.

Federal Income Tax system

Regressive tax system.

supply-side policy

Targets producers through stimulation.

government revenue sources

Includes taxes and primarily intergovernmental revenue.

local government services

Paid for by local government.

government production efficiency policies

Favor both supply-siders and demand-siders.

President Reagan's spending strategy

Attempted to reduce government spending by lowering taxes.

natural monopolies

The government does not try to eliminate all monopolies because they can be beneficial.

zoning restrictions

Most closely associated with local government.

individual income tax incidence

Identified with workers.

U.S. banks membership in the Fed

Approximately 40% of all U.S. banks are members.

National Currency Act

Created a National Banking System during the Civil War.

new money circulation

Distributing new money occurs through banks getting it from the Fed.

early 1800s currency issuance

Issued primarily by banks.

bank establishment

Most are established as corporations.

Federal Reserve note statement

Reflects money's function as a medium of exchange.

gold standard dates

Established in 1900 and abandoned in 1933.

Fed's main monetary policy tools

Reserve requirement, open market operations, and discount rate.

customer deposits usage by banks

Kept partially as legal reserves and loaned out at interest.

U.S. paper money manufacturer

The U.S. Bureau of Engraving and Printing.

credit card interest costs

Can lead to large interest payments.

DDA

Deposit account, defined as checking accounts.

fiat money example

Federal Reserve note.

wage-price controls on inflation effectiveness

Tend to be unsuccessful.

money supply and interest rates connection

A contraction of the money supply is associated with higher interest rates.

Fed ownership assurance

Ensure private national banks purchase shares in the Fed.

interest rate set by banks

The prime rate set by individual banks.

Federal Open Market Committee power

Responsible for raising and lowering interest rates.

money portability characteristic

Easily carried in a pocket or purse.

holding a $1 bill definition

Represents currency, a Federal Reserve note, and fiat money.

capitalist free enterprise economy aspect

Defined by voluntary exchange.

U.S. economic system type

Considered a free market capitalist economy.

wage uniformity in economies

Found in command and socialist economies.

market economy disadvantage

Creates uncertainty and does not provide for everyone's needs.

union activity results

Higher rates of pay for overtime hours worked.

command economy disadvantage

Cannot easily change direction when necessary.

consumer protection mechanism

Enforced by government regulations.

general price rise over time

Known as inflation.

consumer decision role

In a free enterprise economy, ultimately determines what to produce.

Great Depression union efforts

Renewed efforts because hard times united workers.

economic equity definition

Includes laws against discrimination.

socialist economy free lunch principle

Offers extensive services but incurs high tax rates.

unregulated market system aspect

Government seldom regulates markets.

factors of production

Include entrepreneurs, along with land, labor, and capital.

state programs for workers

Set up unemployment compensation programs.

higher education earnings theory

Signalling theory suggests higher education leads to higher earnings.

shift away from capitalism example

Nationalization in Venezuela under Hugo Chavez.

wage gap discrimination example

Illustrated by the glass ceiling.

labor dispute tactics term

Seizure is used by neither unions nor management.

free enterprise system growth factor

Chiefly driven by profit motive.

federal minimum wage increase causes

Commonly linked to inflation.

management-only tactics

Includes lockout used only by management.

initial U.S. union types

Craft unions and industrial unions.

current mixed economies statement

More mixed economies exist than any other type today.

market theory wage determination

Based on supply and demand for worker skills.

Marx's socialism beneficiaries

Believed to be workers.

Sweden's economy shift reason in 1980s

Due to high taxation objections.

GDP and citizen well-being connection

Measures voluntary economic transactions in a nation.

economic contraction conditions

Shocks can halt growth and turn expansion into contraction.

1990s military base closures unemployment

Structural unemployment occurred.

key causes of income inequality

Differences in wealth and education.

trend line definition

Represent a hypothetical line on a graph.

poverty reduction effectiveness decade

Was most effective in the 1960s.

U.S. inflation rate global effects

Makes U.S. exports more expensive.

post-WWII business cycles change

Became shorter recessions and longer expansions.

trough indication

Shows GDP has stopped declining and has begun to increase.

income sources measurement sector

Net foreign sector is not determined by specific income sources.

instability form reversing economic growth

Identified as recession.

unemployment rate inclusion

Includes jobless who looked for jobs the past month.

inflation cause

Demand-pull is NOT considered a cause.

inflation characteristic

Causes changes in retail spending habits.

Lorenz curve function

Compares actual and equal income distribution.

most vulnerable poverty group

Children are the most vulnerable.

personal vs. disposable income difference

PI is before taxes; DPI is after taxes.

household member identification

A single person with relatives elsewhere is counted.

SSI program transition

Initially run by states, later federal government took over.