Economics Review Flashcards

Flashcards from Economics lecture notes for exam review.

What is a price ceiling?

The maximum amount one can charge for a product in the market.

What does a price ceiling depict?

A graph on the left because of the shortage

What is a price floor?

The minimum amount one can charge for a product.

What does a price floor depict?

A graph on the right.

What is the result of both price ceiling and price floors to market equilibrium?

intentional disruption to market equilibrium and will result in either a shortage or surplus.

What is the quantity of demand (QD)?

A change in quantity demanded results from a change in price ONLY.

What is a change in demand (D)?

A change in the quantity that people plan to buy based on any factor other than price.

What are the factors impacting demand?

Prices of related goods (compliments/substitutes), expected future prices, Income (normal + inferior), expected future, Number of buyers, Preferences

What is supply?

Represented by supply schedules and supply curves for the entire market (positive slope)

What is the quantity supplied (QS)?

A change in quantity supplied results from a change in price only.

What is a change in supply (S)?

A change in quantity that people plan to sell based on any factor other than price!

What is a trade deficit?

Import more than Export

What is the Gross Domestic Product (GDP)?

The Market value of all final goods & service produced within Period of time within nation's boarders

What is the Gross National Product (GNP)?

GDP + Income that nationals earn aboard-Income resources used up aboard

What are the components of the GDP?

Must be final product, Must be produced within nation's boarder, Must be produced within a nation's boarder

What is consumption?

Spending by households on durable goods, non-durable goods, and services

What is Investment?

Spending by businesses or private investors

What is government spending?

Expenditures by federal, state, and local governments on goods and services

What are net exports?

Foreign trade

What are the factors impacting supply?

Prices of related goods (substitutes + compliment), Prices of factors of production and other inputs, expected future prices, number of sellers, productivity (technology and natural events)

What is Price Equilibrium?

Market clearing price where supply + demand equal.

What is Shortage?

Quantity demanded exceeds the quantity supplied

What is Surplus?

Quantity supplied exceeds quantity demanded

What is the Law of market forces?

When there is Surplus, the price falls and when there is shortage, the price rises

What does the note U.S. overseas = utterly unreliable represent?

Uniting the world "Against the United States"

How did the Trump administration determine Tariffs?

How Trump admin determined Tariffs: trade deficit us has w/ country / Imports from county

What is the Law of Demand?

If the price of a good rises, the demand of that good falls; if the price of a good decreases; the demand of that good increase; Inverse relationship between the price of a good and the quantity demanded.

What is Quantity Demanded?

The amount of a good, service, or resource that people are willing and able to purchase during a specified period of time at a specified price

Law of Supply

When the price of that good increases; quantity supplied increases. When it decreases.

What is Quantity Supplied?

the amount that people are willing and able to sell during a specified period of time at a specified price

What is Elasticity?

a measure of responsiveness (# influencing decisions)

What is the largest component of GDP?

Household consumption, which is 68.5% of the pie

What is Nominal GDP?

Uses the individual values of each year's $

What is Real GDP?

All dollars adjusted to one value (eliminating inflation)

What is not included in GDP?

Non-market activities (i.e. volunteering), Second-hand goods, Underground economy (i.e. babysitting, drugs)

Where does $2641 billion of our Governmental revenue go to?

Goes to SS Old Age & Survivors Insurance Trust Fund

Why run a deficit & take on debt?

Increase productive capacity

What are payment options to reduce the debt?

Raise taxes, cut spending, increase production (GDP), shift spending

What does a high debt to GDP ratio impact?

Interest rates leading to businesses borrowing & hiring less, fewer worker buying layoffs & recession, investor confidence, inflation, standard of living

What is national revenue?

Revenue from taxes

What is a Deficit?

How much # we're short

What is Debt?

Accumulation of deficits over time