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33 Cards in this Set
- Front
- Back
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Name the four resources economies need |
Land, Labor, human and physical capital, and entrepreneurship |
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Define the resource: Land |
Naturally occurring life and matter |
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Define the resource: Labor |
Human efforts in producing goods |
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Define the resource: capital |
Physical capital: equipment and tools used for production. Human capital: knowledge, skills, education brought to production. |
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Define the resource: entrepreneurship |
People who invent things and start businesses. "one who assumes risk" |
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What do positive incentives do? |
Raise benefits |
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What do negative incentives do? |
Increase costs |
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What is marginal analysis? |
The examination of INCREMENTAL changes in benefits and costs over time |
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What is a marginal benefit? |
The additional benefit of a repeated decision |
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What is a marginal cost? |
The additional cost of a repeated decision |
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How is Probability Theory used? |
To measure direct cost as a Probability of possible consequences |
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What is normative analysis? |
A way of analyzing things based on "what ought to be" rather than facts and logic |
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What is positive analysis? |
A way of analyzing decisions based on facts and logic, rather than emotion. It Often uses "if, then" statements and considers consequences of choices. |
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3 rights granted by pure capitalism? |
Life, liberty, and property. |
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Principles of capitalism? |
A purely capitalist nation would encourage Free exchange, encourage self interested activities, and protect rights of life, liberty, and property. |
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John Locke believes the primary function of government is to: |
Protect property rights of citizens |
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What is a positive externality? |
A positive externality is When a transaction between two parties leads to a spillover of benefits to parties who were not involved in the original transaction. |
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What does Laffer believe of the relationship between tax rates and government revenue? |
Laffer believed that Taxes increase revenue until a certain point. Once you reach that point, people start avoiding taxes and work, and revenues then decrease. The convex curve is named after him. |
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What is A mixed economy? |
A mixed economy Combines free markets, social welfare spending, and regulations on private property ownership |
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Who was James Madison and what did he believe in? |
James Madison was the father of the constitution. Madison believed that the constitution should never be altered, and supported the idea that the U.S should grant only the explicitly enumerated rights to its people, and nothing more. |
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Who was Alexander Hamilton and what did he believe? |
Alexander Hamilton was a lawyer, and a member of the constitutional convention who argued for a broader definition of "general welfare" while he was alive. He was unsuccessful during his time because the courts ruled his ideas unconstitutional, but his famous words encouraged socialism in later years. |
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Who was John Locke and what did he believe? |
John Locke believed that people are by nature free, equal, and have the rights to life, liberty, and property. Locke claimed that people "accept the bonds of government" in order to better protect their rights. |
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Who was Adam Smith and what did he believe? |
Adam Smith Wrote The wealth of nations, which was about the value of free markets. Additionally, he taught about where income inequality comes from. He believes self-interested activities are what keeps the economy and people strong, while remaining free. |
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With respect to tax brackets, what did John F. Kennedy do? |
John F. Kennedy proposed the idea that lowering taxes would boost government revenue and help the economy. Kennedy lowered the top income tax bracket from 91% to 70%. |
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What did Ronald Reagan do with regards to income taxes in the U.S.? |
Ronald Reagan Followed JFKs footsteps by proposing even lower tax rates. Reagan signed the largest tax cut in U.S history, The Tax Reform Act of 1986, which helped create 43 million jobs. |
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What is the principle of comparative advantage? |
The principle of comparative advantage states that a person, business, or nation can gain production and consumption possibilities by specializing in the production of goods that can be produced at a lower opportunity cost than the next best competitor can. |
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Leonard Read, the author of "I, Pencil," claims that freedom is impossible without this one ingredient. What is it? |
A faith in free people. The belief that people with tiny know-how's will arrange themselves automatically to meet mankind's needs. Essentially, self interested people work automatically to solve the problem of scarcity without government interference. |
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Leonard reads overall lesson is: |
Leave all creative energies uninhibited. |
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What is the invisible hand as explained in "I, Pencil"? |
The absence of a mastermind. The hand is the people pursuing self interest. |
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What does the fifth amendment guarantee? |
That the government cannot take private property without just compensation. |
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What did the fifteenth amendment grant citizens? |
The right to vote regardless of race or previous conditions of servitude (slavery) |
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What happened in the Kelo vs. New London case? |
Susette Kelo and others sued the city of New London, claiming that the city violated their 5th amendment rights by using eminent domain to take their property for a private business. Unfortunately, New London won and the citizens lost their property. |
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What happened in the case of Butler versus the United States? |
Congress passed the Agricultural Adjustment Act, which essentially taxed citizens to give subsidies to farmers who promised to reduce their acreage. The idea was to save the agricultural industry by artificially pushing up the prices of agricultural goods by reducing supply, all while providing cash to farmers. The act was ruled unconstitutional. |
