Economic Foundations and Personal Finance Study Guide

These flashcards cover key concepts from economic foundations to personal finance, aiding in understanding and review for exams.

What does Ceteris Paribus mean in economics?

It is a Latin phrase meaning 'all else being equal' or 'holding other things constant.'

What is the simplest definition of Economics?

The study of how individuals and societies allocate scarce resources.

What are the four types of resources?

Land, labor, capital, and entrepreneurship.

Define opportunity cost.

The value of the next best alternative that must be forgone when a choice is made.

What is the Production Possibilities Curve (PPC)?

A graphical representation showing the maximum possible output combinations of two goods that can be produced with available resources.

What is meant by Comparative Advantage?

The ability of an entity to produce a good or service at a lower opportunity cost than another entity.

Define Law of Demand.

As the price of a good falls, the quantity demanded rises, and vice versa.

What is equilibrium in economics?

The point at which quantity demanded equals quantity supplied.

What does the term 'market failure' refer to?

A situation in which the allocation of goods and services by a free market is not efficient.

What are the three functions of money?

Medium of exchange, unit of account, and store of value.

Who was John Maynard Keynes?

An influential economist known for his ideas on macroeconomics and fiscal policy.

What is the purpose of fiscal policy?

To manage economic fluctuations through government spending and taxation.

What is the difference between nominal GDP and real GDP?

Nominal GDP is measured at current prices, while real GDP is adjusted for inflation.

What is the significance of the Lorenz Curve?

It shows the distribution of income or wealth within an economy.

What do the terms 'budget surplus' and 'budget deficit' mean?

Budget surplus is when revenues exceed expenditures, while budget deficit is when expenditures exceed revenues.

What are the two types of debt?

Secured debt and unsecured debt.

Define inflation.

The rate at which the general level of prices for goods and services is rising.

What is a debit card used for?

A debit card allows users to access funds directly from their checking account.

What does 'compound interest' refer to?

Interest calculated on the initial principal and also on the accumulated interest of previous periods.