CSET Multiplesubject Subtest 1 History & Social Sciences Economics Set

All civilized societies

are organized to fulfill basic social needs

The institution of the family

fulfills primary & basic needs.

Educational & religious institutions

transmit the ideals & values of society.

Political institutions

provide a method to analyze the goods & services in a society.

There are 4 basic universals of economics that are present in all types of economic organizations

How to allocate resources among competing & alternative uses. How to distribute goods & services among the population. How to provide economic stability & security. How to provide continued economic growth.

The basis of economics is that society must make choices

Since ther are not enough resources to satisfy all wants, there is a conflict between unlimited wants & limited resources. Societal choice: what to produce, how to produce, & for whom to produce.

Some basic economic principles that are fundamental to an understanding of economics.

Marginal cost: the costs of producing additional units of a good. Law of diminishing returns: the point at which the production of extra units results in decreased returns. Markets: bringing together persons who wish to exchange goods.

ECONOMIC ORGANIZATIONS

...see following cards.

The US economy

is based on concepts of modern capitalism.

Private ownership

of property is fundamental to a capitalistic society.

Capitalism

A competitive, free-market, free-price system is necessary for capitalism to function efficiently.

Modern capitalism can be divided into basic sectors.

Consumption: characterized by freedom of consumer choice. Production: characterized by freedom of enterprise. Financial: composed of all banking & financial institutions. Government: performs task of stabilizing the economy through monetary & fiscal policies.

Measuring economic variables

provides a means of analyzing the economy.

Wealth

is a measurement of assets on hand at a given point in time.

Economy

is the monetary return or other material benefits from currently produced goods & services.

The purchasing power of the dollar

has to do with its ability to command goods & services. Measuring changes in the value of the dollar is a key economic concept.

Production

is a source wealth & income & involves the inflow & outflow of goods and services. The economic growth of the US is measured by the Gross National Product (GNP), which is the value of all goods & services produced in a particular year.

The underdeveloped

areas of the world have shown limited economic growth.

Two-thirds

of the world's population is economically deprived.

Restricted growth is the result of a combination of many factors.

The quality of land, labor, & capital are key factors that determine economic growth. Less-developed countries usually have high population densities. Low incomes retard economies by restricting the opportunity to consume goods.

The Role of Government in the US Economy

...see following cards.

The degree of gov. control

and influence in our economy has steadily grown throughout history.

Industrialization

has created problems in labor-management relations that government seems to be able to handle best.

Urbanization

has created problems in providing essential public services such as police and fire protection and sewage disposal.

Foreign policy

commitments & military expenditures have had lasting effects on the role of government in the economy.

In our modern society,

people have simply demanded more of government.

The major types of gov. activities

in the economy include direct controls over the economy, ownership of production (for example, Hoover Dam), and welfare expenditures.

The major economic impact

of government activity comes from its spending, taxing, and public debt policies.

The various types of taxes include

direct, indirect, proportional, progressive, and regressive. Federal personal & corporate taxes are progressive. Most state and local taxes are proportional. Nearly all excise, sales, and property taxes are regressive.

Ability to Pay and Benefits Received

are the cornerstone of the US tax system.

Ability to Pay

is a theory that bases taxation in accordance with income and wealth position.

Benefits Received

is a theory that bases taxation in accordance with the benefits received by the taxpayer; hunting & fishing fees are examples.

Excise Tax

a tax that is measured by the amount of business done not on property or income from real estate