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45 Cards in this Set

  • Front
  • Back
PACED
1.Problem
2.Alternatives
3.Criteria
4.Evaluate
5.Decide
Opportunity Cost
cost of the next best alternative use of money, time or resources when making a choice
Scarcity
results from society not having enough resources to produce all the things people would like to have
Need
a basic requirement for survival
Want
something we would like to have--not necessary for survival
Three Basic Economic Questions
1.What to produce
2.How to produce
3.For whom to produce
GDP
the dollar value of all final goods & services produced within a country's borders in a 12-month period
GNP
the dollar value of all final goods & services produced in one year with labor and property owned by a country's residents
Monetary Policy
actions by the federal reserve system to expand or contract the money supply in order to affect the cost and availabilty of credit
Law of Demand
a rule that states consumers will buy more of a product at a lower price and less of a product at a higher prices
Law of Supply
principle that more will be offered for sale at higher prices than at lower prices
Factors of Production
1. Land: natural resources
2. Capital: equipment
3. Labor: people/skills
4. Entrepreneurs: risk taker
Federal Reserve
central banking system in the U.S. which conducts monetary policy to control the money supply
elastic demand
a change in price causes a larger quantity demanded
inelastic demand
change in price causes a smaller change in quanity demanded
**gas**
demand
a quanity of a good or service that consumers are willing & able to buy at all possible prices during a given period of time
supply
amount of a product offered for sale at all possible prices
inflation
an increase in the average price level of all the goods and services produced in the economy
buisness cycle
regular ups and downs of real GDP
unemployment
working for less thatn one hour per week for pay in a non-family owned buisness
CPI
statistical series used to measure price changes for a representative sample of frequently used consumer items
capitilism
private ownership of resources
free enterprise
use of privately owned resources to earn profits
diminishing marginal utility
the idea that each additional item that we buy is less useful and gives us less satisfaction thatn the first
Factors Affecting Demand
1.Consumer Income
2.Consumer Tastes
3.Substitutes: price of product goes up, substitute goes down
4.Complements: price of one product goes up, complement goes down
5.Expectations
6.# of Consumers: increase in consumers will increase in demand
Changes In Supply
1. Changes in the cost of resources
2. Productivity
3. Technology
4. Expectations
5. Government Regulations
6. # of sellers
surplus
quanity supplied is higher than the quanity demanded
national debt
total amount borrowed from investors to finance the governments's deficit spending
budget deficit
a negative balance after expenditures are subtracted from revenues
Federal budget
annual plan outlining proposed exependitures and anticipated revenues
Consumer Sector
consists of all persons who occupy a living quarter

recieves its income in the form of disposable personal income
Investment Sector
made up of proprietorships, partnerships, corporations

income comes from retained earnings
Government Sector
includes all local, state, and federal levels of govt.

income comes from indirect business taxes, corporate income taxes, social security, and individual income taxes
Foreign Sectors
includes all consumers and produces ouside the U.S.

represents the difference between the dollar value of goods sent abroad
Economic Freedom
more than being able to buy the things you want

**people can choose their jobs, employers, and how they spend their $$
**buisness can choose what to sell/how much to charge
Voluntary Exchange
the act of buyers and sellers freely and willingly engaging in market transactions

**buyers spend their $$ on a product they believe is worth more than $$
**ticket scalping
Private Property Rights
fundamental feature of capitilism that allows individuals to own and control their possessions as they wish

**have the right to use and abuse their property as long as it doesn't interfere w/ others
**owning a home/land
Profit Motive
incentive that encourages people and organizations to improve their financil/material well-being

**free to risk and part of their wealth in a business venture
**restaurant
Competition
the struggle among sellers to attract consumers

**have the freedom to produce the products they think will be the most profitable
**advertising
Characteristics of Free Enterprise
1. Economic Freedom
2. Voluntary Exchange
3. Private Property Rights
4. Profit Motive
5. Competition
Productivity && Economic Growth
1. Productivity
2. Economic Interdependence
3. Specialization
4. Divison of Labor
5. Investing In Human Capital
Productivity
a measure of the amount of goods and services produced w/ a given amount of resources in a specific period of time
Economic Interdependence
mutual dependency of one person's firm's, regions or nations that can perform them more effieciently
Divison of Labor
a way of organizing work so that each individual worker completes a seperate part of work
Investing In Human Capital
the sum of people's skills, abilities, health, knowledge & motivation