economic final

Factors of production

Resource to make all goods and services

Function of an economic system

To produce goods and services

Entrepreneur

Person who owns a business

Wages

labor, money you make

Trade off

When a country produces one thing instead of another

Free market

= Private ownership

Market economy

Free Enterprise, use supply and demand for the economy

Command economy

All decisions made by the state

Product market

Households purchase the goods and services that firms produce

traditional economy

Exchange things: a pig for some fish, don’t use money don’t live in cities

Example of complimentary goods

Shoes and socks

Reason supply and demand curves shift

1. When the price of gasoline increases, the demand curve for fuel efficient cars is likely to : Shift to the right. 2. If the price of Tide decreases : Shift to the left 3. When income increases, Shift to the right.

Monopoly

When one company has control of a market.

Sole proprietorship

A single owner

Corporation franchise

Parent company sets prices

Partnership

3 kinds of partnership, 2 or more people working a business

Unlimited liability

When you have personal responsibility

Horizontal Mergers

same industry buying another company. Pepsi buys coke

Parts of the Business cycle

Trough, Contraction, Expansion, Peak

How is it (business cycle) measured

Trough to trough

Unemployment rate measures

Percent of labor force that is unemployed but looking for work

Consumer spending

Buying a new car

Hyper inflation

When money is so cheap it is worthless

When Fed was established

Started 1913

Contractionary monetary policy

When the Fed decreases money supply

Discount Rate

Interest rate the Fed charges banks

Stagflation

High inflation and unemployment at the same time

Store of value

Money can still be worth something in the future, food cannot

Fiat money

Legal government money: cash

Sin tax

Put on alcohol and cigarettes

Who sets fiscal policy

Congress and President

Where does most government money come from

Income tax

National Debt

Budget deficit..how much we are in the red

Social Security

Largest source of mandatory spending

Flat Tax

everyone pays the same

Progressive tax

The more you make, the more you spend