Econ Review

Point A?

Full Employment

Point F?

Inefficient Production

Point G?

Unattainable

Raw materials, water, and building are examples of

Land

Cashier and Truck Driver are examples of

Labor

Truck, tools, and computer are examples of what?

Capital

What is the equilibrium price?

P3

What is the equilibrium quantity?

q3

Law of Demand

Higher the price, lower the demand

Law of Supply

An increase in price results in an increase in supply

If the demand decreases

Price decreases. Quantity decreases.

If demand increases

Price increases. Quantity Increases.

If supply decreases

Price increases. Quantity decreases.

If supply increases

Price decreases. Quantity increases.

Why would a government want to regulate a monopoly?

To prevent exploitation

Adam Smith

when people act in their own self interest in a free market, it leads to better goods fair prices and a stronger economy for everyone

Gary Becker

used social behavior as a premise to determine economic behavior, rational self interest, his research, focused on investments and human capital family, household behavior, crime and punishment and discrimination in markets

John Maynard Keynes

during tough economic times the government should step in and spend money to help boost demand create jobs and get the economy growing again

Milton Friedman

believes in limited government where businesses and individuals make their own choices leading to best results for everyone

The federal budget has a ________ when government increases spending and decreases taxes

deficit

The federal budget has a ________ when the government decreases spending and increases taxes.

surplus

Derived Demand

chain reaction when the demand for one thing depends on the demand for something else

Three Functions of Money

medium of exchange, unit of account, and store value

Medium of Exchange

something people use to buy or sell.

ex: money

Unit Of Account

A way to measure the value of the good

Store of Value

something that keeps it worth overtime

Cost Push Inflation

The cost of making goods goes up so businesses raise prices to cover the higher cost

Demand Pull Inflation

The demand for goods is higher than the supply, causing prices to rise