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51 Cards in this Set

  • Front
  • Back
total cost, including time
how much is produced
money market account
an account that allows limited transactions and pays an interest rate that changes witht the demand for loans
most output from a given input; most bang for your buck
comparative efficiency
efficiency of an item when compared to other items
geographic specialization
production suited to regions (climates); oranges are best grown in florida/spain
too efficient; increased output but at an input that is too high.
comparative advantage
every individual has a strength; Florida=oranges, Iowa=wheat. not the other way.
absolute advantage
ie; Microsoft. however even though you may have an absolute advantage in many areas, it is best to stick to where you have the highest comparative advantage
What was Henry Ford's system used to produce large quantities of automobiles, and what were its four components?
Mass production
-standardized parts
-assembly line
-production efficiency
Why is it important for a manufacturer to be efficient?
Profit, profit, profit!
Is it always necessary for a country to be rich in natural resources in order to prosper?
No, look at Hong Kong
How is it possible to take the division of labor too far?
Americans have more leisure time than they had 100 years ago, even though the nation is more productive now. Why?
Machines do a lot of the work.
a person who saves capital and puts it to good use
an investor either lends his money to someone else (to recieve intrest on it) or uses it to produce something more himself.
transaction account
anaccount that allows checks to be written up to the dollar ammount that the account holder has deposited.
savings account
a bank account that allows the account holder to earn interest on his deposits
CD (certificate of deposit)
an account that guarantees a certain interest rate and has a specified maturity date. withdrawing $ before this date = penalty
a contract between two parties in which one party protects the other against certain types of loss in exchange for payments
insurance payments
defined contribution plan
(401k) employer does not promise an employee any certain amount upon retirement and the employee, the employer, or both are required to contribute regularly to a special tax-sheltered retirement account set up for the employee.
cumpulsory saving
saving is directed and enforced by the government
a legal entity, distinct from the people who own it
a legal entity, distinct from the people who own it
limited liability
way of incorporating with out being personally responsible
resources corporations gather by selling stock in their business
equal portions of a corporations stock
a document tha guarantees the bondholder the amount of his original investment plus a specified rate of interest by a certain date.
shares of a corporation's profit
mutual fund
invests in a company that buys a lot of stock
liquid investment
stocks, bonds, and mutual funds...they are assets that flow easily because they can be converted into other investments or cash
common stock
stockholders can vote to decide who the corporation heads will be. they get dividends when the company makes money
perferred stock
stockholders recieve a fixed amound in cash dividends annually
stocks vs. bonds
bondholders are guarenteed repayment
gold/silver...metallic money
Gresham's Law
People horde $, so bad $ will take good $ out of circulation
face value
asserted value (a quarter=25cents)
putting too much money into loses value.
taking money out of circulation
legal tender
$ issued by governments, approved by banks.
intrinsic value
(gold) has value other than what it is worth as a currency
fiat money
currency backed by nothing but the governments command
Federal Reserve System
central banking system (actually a independent agency)
credit card
theory that the ariation int he money supply is the main source of economic fluctuations
What are the 3 functions of money?
-medium of exchange
-provide a measure of value
-provide a convenient menas of storing wealth
6 qualities ideal money posseses
-stability in value
-intrinsic value
-stanard appearance
What is the chief aim of the Federal Reserve?
To form America's monetary policy
What are the 3 main tools of the Federal Review?
Board of Governors: operate the banking system.
Fedeal Open Market Committee: decide on the buying and selling of gov't securities
Federal Reserve Banks: (12) influence the policies of the private commercial banks