Economics, Money, and Banking

These flashcards cover key concepts from the Economics, Money, and Banking lecture, focusing on definitions and interactions within economic systems.

What is economics?

The study of how a society uses its scarce resources to produce and distribute goods and services.

What is microeconomics?

The study of economic behavior by consumers, businesses, and industries that determine the quantity of goods and services demanded and supplied at different prices.

What is macroeconomics?

The study of larger economic issues, such as unemployment and government policies, and how a country allocates its scarce resources.

How do micro and macroeconomics interact?

Understanding the economy requires knowledge of how small-scale (micro) and large-scale (macro) forces influence each other.

What are factors of production?

Economic resources including natural resources, human resources, capital, and entrepreneurship.

What is scarcity?

A condition that creates competition for resources and forces trade-offs among consumers and businesses.

What does the consumer price index (CPI) measure?

The rate of inflation by comparing the change in prices of a representative basket of consumer goods and services.

What is GDP (Gross Domestic Product)?

A measure of a country's economic output by computing the sum of all goods and services produced for final use within its boundaries.

What is a free-market system?

An economic system where individuals and companies own the factors of production and make decisions on production, distribution, and pricing.

What is a planned economy?

An economic system where the government makes all decisions about production, pricing, and distribution.

What is the definition of unemployment?

The percentage of the labor force that is currently without employment.

How does inflation affect prices?

Inflation is a steady rise in the average prices of goods and services throughout the economy.

What services do investment banks provide?

Investment banks offer advisory services, facilitate mergers, underwriting IPOs, managing investments, and raising capital.

What are commercial banks?

Financial institutions that accept deposits, offer checking and savings accounts, and provide loans.

What is a mixed economy?

An economic system that combines elements of both free-market and command systems.

What is the role of credit rating agencies?

To offer opinions about the credit worthiness of borrowers and specific investments.