Mr. Scheffler's Econ Test 1

Macroeconomics

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

Micoreconomics

concentrates on the behavior of people and orgs in markets for particular products or services in relation to price theory

Scarcity

The limited nature of society's resources

Jean Baptiste Colbert

An economic advisor to Louis XIV; he supported mercantilism and tried to make France economically self-sufficient.

Mercantilism

Economic philosophy of 17th and 18th century European nations; sought to increase wealth and power through acquisition of gold and silver and establishing a favorable balance of trade. Colonies served interest of mother country through importation of its raw materials -> Exportation > importation

Adam Smith

Scottish economist who wrote the Wealth of Nations a precursor to modern Capitalism.

Capitalism

(1776) , an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations.

Thomas Malthus

1798 said human population can outgrow food supply; result will be war, famine, disease.

David Ricardo

(1772-1823) British political economist that coined the theory of comparative advantage.

Comparative Advantage

The ability of a country to produce a good at a lower cost than another country can.

Jeremy Bentham

(1748-1832) British theorist and philosopher who proposed utilitarianism, the principle that governments should operate on the basis of utility, or the greatest good for the greatest number.

utilitarianism

idea that the goal of society should be to bring about the greatest happiness for the greatest number of people

Classical Liberalism

A term given to the philosophy of John Locke and other 17th and 18th century advocates of the protection of individual rights and liberties by limiting government power.

Karl Marx

19th century philosopher, political economist, sociologist, humanist, political theorist, and revolutionary. Often recognized as the father of communism. .

Socialism

A system in which society, usually in the form of the government, owns and controls the means of production.

Revolutionary socialism

Marxists that believed in violent revolution to bring the collapse of capitalism.

Utopian socialism

Favored a gradual and democratic adoption of socialism

Monopoly

Complete control of a product or business by one person or group

Vertical Integration

Practice where a single entity controls the entire process of a product, from the raw materials to distribution

Horizontal intergration

Joining together of business that are engaged in similar business activities or processes

Perfect competition

A market structure in which a large number of firms all produce the same product. The market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product

Monopolistic competition

A market structure in which barriers to entry are low and many firms compete by selling similar, but not identical, products.

Oligopoly

(economics) a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors

Total War

A war that involves the complete mobilization of resources and people, affecting the lives of all citizens in the warring countries, even those remote from the battlefields.

Totalitarianism

A political system in which the government has total control over the lives of individual citizens.

The Great Depression

a time period during the 1930s when there was a worldwide economic depression and mass unemployment

Recession

A period of declining economic growth

Expansion

A period of economic growth as measured by a rise in real GDP

What finally got the United States out of the Great Depression?

The total employment of World War II.

The New Deal

1933-1937 Government sponsored programs implemented by President Franklin D. Roosevelt to revitalize the economy and alleviate poverty and despair caused by the Depression.

John Maynard Keynes

British economist who argued that for a nation to recovery fully from a depression, the government had to spend money to encourage investment and consumption

Fredrich Hayek

Laissez-faire. Market is too complicated to control and the prices are the indicator that cause things to even out. Market is self-correcting and individuals acting rationally and in their self-interest will create the most prosperity. Wins nobel prize 1974 for economic science

Classical economists

A group of 18th and 19th century economists who believed that economic downturns were short-run phenomena that corrected themselves through natural market forces; thus, they believed the economy was self-correcting and needed no government intervention

Milton Friedman

American economist and adviser to President Ronald Reagan who supported free trade and criticized government involvement in the economy.

Universal basic income

A theorized possible answer for a future that is fully automated resulting in a post-scarcity world, but one with few jobs.

The Reagan Revolution

American president characterized by adherence to supply-side economics (federal tax reduction), deregulation, and anti-union policies; deficit became a problem; Ended growth of new new deal programs.

Market economy

An economy that relies chiefly on market forces to allocate goods and resources and to determine prices.

Command economy

An economic system in which the government makes all economic decisions.

Traditional economy

based on agriculture (farming) and barter (trade)

Mixed economy

A combination of a command and market economy

Opportunity cost

Cost of the next best alternative use of money, time, or resources when one choice is made rather than another

Globalization

A set of processes that are increasing interactions, deepening relationships, and heightening interdependence without regard to country borders.

Gross Domestic Product

The sum total of the value of all the goods and services produced in a nation

GDP per capita

the total value of goods and services produced in a country in a year, divided by population

PPP

purchasing power parity

Revenue

Incoming money

Profit

Money that is left after expenses have been paid for from a business or an investment.

Accounting profits

Total Revenue minus Total Cost

Economic profits

total revenues minus total opportunity costs of all inputs used, or the total of all implicit and explicit costs.

Interest rates

the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Federal Reserve

The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates

Inflation

A general increase in prices and fall in the purchasing value of money.

Stagflation

a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)

Hyperinflation

A very rapid rise in the price level; an extremely high rate of inflation.

Deflation

A decrease in the general price level

Reserve Requirement

ratio of money that must be kept by law in a bank and cannot be loaned out to consumers

Fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

Monetary policy

Changes in the supply of money and the availability of credit initiated by a nation's central bank to promote price stability, full employment and reasonable rates of economic growth.

Describe the two different schools of economic thought from the "economic battle of the century" between Keynes and the Austrian school.

Know this! Possible essay question! All the information you will need for this can be found in your readings, your notes, and on the posted videos.

The Ten Principles of Economics

Possible essay question. Know them and be able to give a decent explanation.

When did organized labor become an important part of the American economy

the 19th century

What are the tools of organized labor?

mediation, arbitration, work stoppage(strike)

margin cost

the cost of producing one more unit of a good

marginal utility

satisfaction or usefulness obtained from acquiring one more unit of a product

substitution effect

the change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes

Conditions of demand

factors other than price, such as income or the price of other goods, which lead to changes in demand and are associated with shifts in the demand curve

supply

The amount of goods available