Economics Test 2 Study 2

Front 1

Banknote:

Back 1

Today, paper money. Originally, an IOU from a bank, usually for gold or silver

Front 2

Coin:

Back 2

A wafer or disc of precious metal. True coins usually have three markings; weight, fineness, and name of mint

Front 3

Command Economy:

Back 3

A top down, centrally planned economy.Usually found in socialist or communist nations.The government controls all means of production. The government decides what items will be produced.

Front 4

Dollar:

Back 4

a one ounce ingot of silver

Front 5

Dow Jones Industrial Index:

Back 5

created in 1896 by Charles Dow and Edward Jones, uses a formula to determine a cumulative value from a few stocks out of thousands traded on the NYSE. Sometimes used as a gauge of business output.

Front 6

Federal Reserve Notes:

Back 6

Not backed by gold or silver. Given value by the Legal Tender Law.

Front 7

Fiat Money:

Back 7

legal tender money

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Goods:

Back 8

Capital goods are things like machinery that produce other items. Goods are tangible items that are produced for consumption, such as cars, computers, clothes, and food.

Front 9

Greenbacks:

Back 9

the nickname of the paper currency printed during and after the Civil War

Front 10

Hallmark:

Back 10

The mint-mark of a coin. Tells who made the coin. Like a trademark

Front 11

Inflation:

Back 11

an increase in the amount of money. Causes the money to lose value and prices then rise. Inflation causes rising prices.

Front 12

Law of Supply and Demand:

Back 12

When the supply of something goes up, the price per unit of that item goes down.

Front 13

Legal Tender Law:

Back 13

A law which provides for the punishment of anyone who refuses to accept the legal tender money

Front 14

Market Economy:

Back 14

A decentralized economy – capitalism Free Market The market is free to operate based on people’s wants and needs. Demand, supply and competition are what control the economy. Little or no government interference

Front 15

Mixed Economy:

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Economies which have elements of both market and command. Some parts of the economy are government controlled.. like healthcare or transportation

Front 16

Money:

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The most easily traded thing in a society. Economists call it the most liquid commodity. Small, easy to move, widely desired, scarce, hard to copy, and corrosion proof

Front 17

Monopoly:

Back 17

a form of imperfect competition; when there is one seller of a good or service without a close substitute so a single supplier can determine the price for and availability of what it offers. They are illegal in the United States.

Front 18

NASDAQ:

Back 18

national association of Securities Dealers Automated Quotations, founded in 1971. It is an electronic stockmarket, 2nd largest stock exchange in the U.S.

Front 19

New YorkStock Exchange:

Back 19

largest actual stock market in the world. Began in 1792 by 24 stock brokers

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Recession:

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The beginning of a depression that never went all the way

Front 21

Runaway Inflation:

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Hyper inflation, prices rise rapidly every few hours, much worse than double-digit inflation

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Services:

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intangible duties that are performed for pay, such as house cleaning, child care, chauffeur service, and teaching lessons.

Front 23

Shortage:

Back 23

when the supply is less than the demand for something

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StockMarket:

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a market where shares of ownership in public corporations are traded

Front 25

Stocks:

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shares of ownership of public corporations

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Substitute Goods:

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A substitute good is an alternative to the item that the consumer would otherwise buy.

Front 27

Utility:

Back 27

In economics, utility means satisfaction not usefulness.

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S&P 500:

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Standard and Poor 500, 2nd most widely followed stock index

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Surplus:

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an excess supply, more than is consumed

Front 30

How did a dollar get its name?

Back 30

Joachimthal was a mint in the Czech Republic A Joachimthal was one ounce of gold, the name shortened to thaler which was shorten to dalar which became dollar

Front 31

Reason for inflating in a democracy?

Back 31

to give the people or make the people think they are becoming more prosperous so that the government officials will be re-elected

Front 32

Reason for inflation in a Dictatorship?

Back 32

because they fear revolutions.

Front 33

What happens to wages and prices when there is a large increase in the supply of money?

Back 33

increases in wages and prices

Front 34

What is the result of inflation? .

Back 34

The wage/price spiral is a result of inflation

Front 35

When gold stopped circulating? Gold coins

Back 35

stopped circulation in the United States in the 1930’s.

Front 36

When did silver stops circulating

Back 36

stopped circulating in the 1960's

Front 37

What keep velocity under control?

Back 37

For velocity to fall money the demand for money must rise. People by the way they spend or hold their money

Front 38

What are the three stages of inflation?

Back 38

1.People save money. 2.People decide to spend the newly created money. 3.Money loses its value.

Front 39

What is the term for speed at which money changes hands?

Back 39

velocity of circulation

Front 40

Equilibrium:

Back 40

When the supply and demand is equal.

Front 41

What ends runaway inflation?

Back 41

When people reject the money and began using something else for currency.

Front 42

What is an example of America's Boom/Bust cycle

Back 42

the 1929 stock market crash

Front 43

What causes recessions and depressions?

Back 43

the bad policy of inflation

Front 44

Money (currency) that has a value based on a government declaration rather than on a commodity is called _________ __________.

Back 44

fiat money