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26 Cards in this Set

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What is a Profit Motive?
The force that encourages people and organizations to improve their material well- being
The heart of the American free-enterprise system. Operating in ways that will maximize profits.
What is Open Opportunity?
The concept that everyone can compete in the marketplace.
Different people & companies will have different outcomes, depending on their success in the marketplace.
What is Legal Equity?
The concept of giving everyone the same legal rights.
This allows everyone to compete in the economic marketplace & promotes economic mobility up/down.
What is a Free Contract?
The concept that people have the right and privilege to control their possessions as they wish.
Allows people to decide what agreements they want to enter into.
What is Voluntary Exchange?
The concept that people may decide what and when they want to buy and sell.
Prevents people being forced into buying or selling at any particular time or at specific prices.
What is Competition?
The rivalry among sellers to attract customers while lowering costs.
Provides consumers with the choiceof a larger variety of good, most of which are sold at reasonable prices.
What is an Interest Group?
A private organization that tries to persuade public officials to act or vote according to group members interests.
Most form around some economic issue like taxation, farm aid, or land use.
What is a Public Disclosure Law?
A law requiring companies to provide full information about their products.
Government information used by consumers to protect themselves from dangerous products or fraudulent claims.
What is Public Interest?
The concerns of the public as a whole.
This Gov. intervention for consumer protection led to manufacturing standards, safer, more effective drugs & food delivery sanitation
What is Macroeconomics?
The study of the behavior and decision making of entire economies.
Examines major trends for the economy as a whole. Macro means "large" in the study of economic concepts
What is Microeconomics?
The study of the economic behavior and decision-making of small units, such as individuals, families, households, and businesses.
Micro means "small" in the study of economic concepts
What is the Gross Domestic Product? (GDP)
The total value of all final goods & services produced within a particular economy.
Economists follow this statistic of a country's economic growth to predict business cycles.
What is a Business Cycle?
A period of Macroeconomic expansion followed by a period of contraction/decline.
These may last less than a year or many years before changing. The Gov. tries to prevent major swings in the economy by setting various interest rates or printing more currency.
What is the Public Good?
A shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers
Taxes are collected by the federal government to fund projects in the public interest ( ie., dams, national parks, space program, et. al.
What is the Public Sector?
The part of the economy that involves the transactions of the government.
Criteria include: (1) the benefit to each individual is less than the cost each would have to pay if it were provided privately; &
(2) the total benefits to society are greater than the total cost.
What is the Private Sector?
The part of the economy that involves the transactions of individuals and businesses.
Has little incentive to produce public goods as there would be little/no profit from it. Ex. funding public education
What is a Free Rider?
Someone who would not choose to pay for a certain good/service, but who would get the benefits of it anyway, if it were provided as a public good.
Ex. You probably would not contribut $3,500 to buy soldiers helmets (your portion of the U.S. military cost this year), even though this defense protects you whether you pay or not.
What is Externality?
An economic side effect of a good/service that generates benefits or costs to someone other than the person deciding how much to produce or consume.
May be positive ( public goods generate benefits to many people including "free riders" or Negative (unintended costs to someone other than the producer of the good/service).
What is a Poverty Threshold?
An income level below that which is needed to support families or households.
A relative figure determined by the Federal Gov. and adjusted periodically for inflation rates. Ex. A single parent age 65 with one child = $12,120 in 2002.
What is Welfare?
Government aid to the poor.
Critics of this program argue that people are becoming dependent on these $$$ & are unable/unwilling to get off it through employment in the work force.
What are Cash Transfers?
Direct payments of money to eligible poor people.
Programs include: Temporary Assistance for Needy Families, Social Security, & Workman's Compensation
What are In-Kind Benefits?
Goods and services provided for free or at greatly reduced prices.
Include food giveaways, food stamps, subsidized housing, and legal aid.
What is Market Failure?
A situation in which the market does not distribute resources efficiently.
A scenario where the criteria for properly functioning market system does not exist. (ex. road construction by private industry would not be profitable)
What is the Work Ethic?
A commitment to the value of work and purposeful activity.
Americans have lost some of this value due to government assistance programs & higher standards of living
What is Technology?
The process used to produce a good or service.
Improvements in this area allow an economy to produce more output from the same or a smaller quantity of inputs, or resources.
What are Private Property Rights?
The concept that people have the right & privilege to control their possessions as they wish.
Allows people to make decisions about their own property. (ex. Prohibiting hunting rights on your land)