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43 Cards in this Set

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Define and Explain an Economic System
A nation has RESOURCES which are turned into GOODS & SERVICES (called PRODUCTION) and they are given to the PEOPLE (DISTRIBUTION) who use them (CONSUMPTION)
R -> G/S -> P ->
What are the four parts (in order) of the business cycle?
Peak, Recession, Depression, Recovery
Top of a mountain, "Rogaine," The Great _______, and what you do after you're in the hospital.
During the "peak" of the business cycle, what are the statuses of the economic indicators: GDP, CPI, and unemployment?
GDP is up, CPI is constant, unemployment is down
All of these indicators are good.
During the "recession" of the business cycle, what are the statuses of the economic indicators: GDP, CPI, and unemployment?
GDP is slowly going down, CPI has a little bit of change, and unemployment is slowly rising
All of these indicators are sinking slightly... ROGAINE!!!
During the "depression" of the business cycle, what are the statuses of the economic indicators: GDP, CPI, and unemployment?
GDP is WAY down, CPI is changing a LOT, and unemployment is at an all-time low
All of these indicators are at an all-time low!
During the "recovery" of the business cycle, what are the statuses of the economic indicators: GDP, CPI, and unemployment?
GDP is slowly going up, CPI goes back to a little bit of change, and unemployment is going down slightly
All of these indicators are... what else? RECOVERING! :-)
Define "the purchasing power of the dollar" and what effects it. (PP$ for future reference)
Definition: What a dollar can buy / how much it's worth; it is affected by inflation and deflation, and the supply available
McDonalds and Olive Garden
Describe Inflation: the effects on the prices, the PP$, the people's reaction, and the government's reaction
Prices go up, PP$ goes down, people buy on credit and continue to spend money, and the goverment therefore increases taxes and interest rates
Wavelike motion starting "up"
Describe Deflation: the effects on the prices, the PP$, the people's reaction, and the government's reaction
Prices go down, PP$ goes up, there is a surplus of goods because nobody is buying things - people get laid off and save their money, and the government in turn lowers taxes and interest rates (as a last resort, they will also make more jobs available)
Wavelike motion starting "down"
Define the Economic Indicator: "CPI"
Consumer Price Index: price changes for consumers w/in a year
Cons____ Pri____ Ind____

(does that help?)
Define the Economic Indicator: "GNP"
Gross National Product: total g/s produced BY a nation w/in a year
Define the Economic Indicator: "GDP"
Gross Domestic Product: total g/s produced W/IN a nation w/in a year
Define the Economic Indicator: "GDP per capita"
Gross Domestic Product per person: production rate of each person in a nation - found by dividing the GDP by the population of a nation
"per capita" sort of resembles "per cap," and most of us humans wear a cap on our heads. So, "per head..."
Define the Economic Indicator: "unemployment"
the number of people w/out jobs WHO WANT ONE (aka, people who are unemployed but do not want jobs are excluded from this statistic)
What is the difference between "GDP" and "GNP"
Gross domestic product is w/in a nation, but gross national product includes locations owned BY the nation, but is not limited to them... aka, locations owned by the USA but are located in countries other than the US are included in GNP but NOT in GDP
McDonalds locations
What are the three basic economic problems (questions asked)?
What goods and services are to be produced, how are they to be distributed, and to whom are they to be distributed?
What? How? and To Whom? (now elaborate)
What are the 3 types of Economic Systems?
Traditional, Market, and Command (Edict)
The first was pre-industrialization and (in the USA) only exists in the Amish. It was then broken into these two others by industrialization.
What are the 7 functions of the Federal Reserve?
Protect $, Regulate $ supply, Give $ to the economy, Provide a system for check clearing, Supervise member banks, Lender of last resort, Banker for the government
Think "Big Mama" and that should help with a few.
What is the FDIC, what does it do, and who is the president of it?
Federal Depository Insurance Corperation: guarantees money will be in the bank for you, and Ben Bernnacki is the president of the company.
Fed____ Depos______ Insu______ Corp_______
Define "laissez faire" and tell which of the two main parties of the US use / support this concept
"let it alone:" Democrats do NOT support this idea. Republicans DO - taxes go down with this party, and the people are let to do what they need.
Yeah... it's French. So find an online translator if you need a hint.
Give a few reasons why economies trade.
You may have something like: variety (to get more stuff :-D), necessity / to meet the demands of the people, to boost the economy, and to help form alliances. This last one is rather important and you might want to know it.
The really important ones to know are to boost the economy and to form alliances.
Define this trading term: quota
a limit on imports
Define this trading term: imports
goods coming into the country
IMports sounds like INports
Define this trading term: exports
goods going to other nations
EXports... EXit
Define this trading term: tariff
a tax on imports
think: Revolutionary War... what did Great Britain do to our imports?
Define this trading term: WTO
World Trade Organization: sets standards for trading
Tell the 3 members of NAFTA (and tell what NAFTA stands for)...
North American Free Trade Association: 3 members are Canada, Mexico, and the US
the NA in NAFTA is "North American," so what would the three members be?
What was the purpose of NATO, when was it established, and what does it stand for?
North Atlantic Treaty Organization: 1948 to stop the spread of "agression" (actually communism)
the NA does NOT stand for North American
Define this trading term: OPEC
Organization of Petroleum Exporting Countries: controls oil trade
What two purposes does a corperation have to have in order to exist?
Stock and State Charter (employee and consumer fairness)
Both start with the letter "S"
What are the 4 factors of production?
Labor, Capital, Land, and Management
Think "making pie" or "building a school"
Define: Economics
the social science studying the production, distribution, and consumption of goods and services
If you know what an economic system is and how it's organized, use all those parts to make your definition!
When you think market system, what words pop into your mind?
You should be thinking: choices, competition, and risk.
When you go to the mall, how many choices of jeans do you have? Go from there.
When you think command or edict system, what words pop into your mind?
You should be thinking: order, government, and control
communism
In a traditional economic system, what primary activity is the system based around usually?
Farming and agriculture. Possibly hunting.
Because this is the most primitive system, the primary goal is to stay alive. So therefore, what activity involves staying alive?
Which of the three types of economic systems is MOST susceptible and accepting to change?
Market
Think: competition, risk, and choices
Which of the three types of economic systems is LEAST susceptible and accepting to change?
Traditional
If your ancestors used their hands to dig a hole, and you used a shovel in this system, you would be shunned.
Which way does the demand curve always go: up or down?
down
look at the first letter of the word
Which way does the supply curve always go: up or down?
up
look within the word for the answer
What is the name of the point where the supply curve and the demand curve intersect?
The Equilibrium Point
This intersection is when they are EQUAL and it is a DOT on the graph.
What is the Law of Supply?
as prices increase, producers are willing to produce more in order to make more $
What is the Law of Demand?
as prices increase, consumers buy less
What should the Consumer Price Index be near all the time to reduce inflation or deflation?
100. 100 is the perfect spot and is the "start number" or "index"
when you are figuring out the CPI by doing your algebra of GDP divided by people, you multiply by this number.