Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
59 Cards in this Set
- Front
- Back
|
JOHN MAYNARD KEYNES |
Believed if the economy was in a recession, the government should increase spending and cut taxes to stimulate the economy for a short term.
• Wrote The General Theory of Employment,Interest and Money in 1936. |
|
|
• Economics
|
The study of how society employsresources to produce goods and services forconsumption among various groups and individuals.
|
|
|
Macroeconomics
|
Concentrates on theoperation of a nation’s economy as a whole.
|
|
|
Microeconomics
|
Concentrates on the behavior of people and organizations in markets for particular products or services.
|
|
|
Resource Development
|
The study of how to increase resources and create conditions that will make better use of them.
|
|
|
EXAMPLES of WAYS to INCREASE RESOURCES
|
New energy sources– Hydrogen fuel
• New ways of growingfoods– Hydroponics • New ways of creatinggoods and services– Aquaculture– Nanotechnology |
|
|
THOMAS MALTHUS and the DISMAL SCIENCE
|
Malthus believed that if the rich had most of thewealth and the poor had most of the population,resources would run out.
• This belief led the writer Thomas Carlyle to calleconomics “The Dismal Science.”• Neo-Malthusians believe there are too manypeople in the world and believe the answer isradical birth control. |
|
|
POPULATION as a RESOURCE
|
An educated population ishighly valuable.-
Business owners provide jobsand economic growth for theiremployees and communitiesas well as for themselves. |
|
|
"Green" product success |
The public’s concern withglobal warming contributed tothe success of the ToyotaPrius.
• Farmers are growing morecorn and other crops to usefor biofuels. |
|
|
ADAM SMITH the FATHER of ECONOMICS
|
Freedom was vital to any economy’s survival.
• Freedom to ownland or property andthe right to keep theprofits of a businessis essential. • People will workhard if they believethey will berewarded. |
|
|
The INVISIBLE HAND THEORY
|
As people improve their own situation in life,they help the economy prosper through the production of goods, services and ideas.
|
|
|
Invisible Hand
|
When self-directed gain leads to social and economic benefits for the whole community
|
|
|
example of invisible hand theory |
A farmer earns money byselling his crops.• To earn more, the farmer hiresfarmhands to produce morecrops.• When the farmer producesmore, there is plenty of foodfor the community.• The farmer helped hisemployees and his communitywhile helping himself.
|
|
|
CORRUPTION’S EFFECT on the ECONOMY
|
In many countries, a businessperson must bribethe government to gain permission to own land,build, and conduct business operations.
|
|
|
Capitalism
|
All or most of the land, factories andstores are owned by individuals, not thegovernment, and operated for profit.
Examples: United States, Canada, Australia, England |
|
|
State Capitalism
|
When the state, rather thanprivate owners, run some businesses.
Examples include China and Russia |
|
|
What is FINCA |
loaned more than $447 million to over600,000 micro-entrepreneurs in some of theworld’s poorest countries.
Its borrowers have a 97.6 percent loan repaymentrate |
|
|
CAPITALISM’S FOUR BASIC RIGHTS
|
1. The right to own private property. Most fundamental right.
2. The right to own a business and keep all that business’s profits. 3. The right to freedom of competition. 4. The right to freedom of choice. |
|
|
ROOSEVELT’S FOUR ADDITIONAL RIGHTS
|
1. Freedom of speech andexpression.
2. Freedom to worship in yourown way. 3. Freedom from want. 4. Freedom from fear. |
|
|
Free Market
|
Decisions about what and howmuch to produce are made by the market.
• Consumers send signals about what they likeand how they like it. |
|
|
Price
|
tells companies how much of a product they should produce.
Determined by how much consumers are willing to pay and at what point the business owner is willing to sell. • If something is wanted but hard to get, the price will rise until more products are available. |
|
|
CIRCULAR FLOW MODEL
|
The circular flow of income follows a specific pattern: Production → Income → Expenditure → Production. This circular flow is ongoing between households and firms.
https://www.boundless.com/economics/textbooks/boundless-economics-textbook/the-market-system-2/introducing-the-market-system-45/the-circular-flow-model-168-12266/images/circular-flow-of-goods-income/ |
|
|
Supply
|
The quantities of products businesses arewilling to sell at different prices
|
|
|
Demand
|
The quantities of products consumersare willing to buy at different prices.
|
|
|
Market Price (Equilibrium Point)
|
Determined by supply and demand, this is the negotiated price.
|
|
|
FOUR DEGREESof COMPETITION
|
1. PerfectCompetition
2. MonopolisticCompetition 3. Oligopoly 4. Monopoly |
|
|
FREE MARKET BENEFITS
|
It allows for opencompetition amongcompanies.
• Provides opportunities forpoor people to work theirway out of poverty |
|
|
LIMITATIONS FREE MARKET
|
People may start to letgreed drive them.
|
|
|
Socialism
|
An economic system based on thepremise that some basic businesses, like utilities,should be owned by the government in order to moreevenly distribute profits among the people.
Entrepreneurs run smaller businesses. • Citizens are highly taxed. • Government is more involved in protecting theenvironment and the poor |
|
|
BENEFITS of SOCIALISM
|
• Social equality
• Free education • Free healthcare • Free childcare • Longer vacations • Shorter work weeks • Generous sick leave |
|
|
NEGATIVES of SOCIALISM
|
• Few incentives for businesspeople to take risks.
• Brain Drain: Some of a country’s best and brightestworkers (i.e. doctors, lawyers and business owners)move to capitalistic countries. • Fewer inventions and innovations because thereward is not as great as in capitalistic countries. |
|
|
Communism
|
An economic and political system inwhich the government makes almost all economicdecisions and owns almost all the major factors ofproduction.
• Prices don’t reflect demand which may lead toshortages of items, including food and clothing. • Most communist countries today suffer severeeconomic depression and citizens fear thegovernment. |
|
|
Free-Market Economies
|
The market largelydetermines what goods and services areproduced, who gets them, and how the economygrows
|
|
|
Command Economies
|
The governmentlargely determines what goods and services areproduced, who gets them, and how the economywill grow.
|
|
|
Mixed Economies
|
Some allocation of resourcesis made by the market and some by the government.
• Neither free-market nor command economieshave created sound economic conditions socountries use a mix of the two economic systems. |
|
|
CHINA’S CHANGING ECONOMY
|
China’s economy is growing two or three times fasterthan the U.S.
• China is worried about inflation and a possiblehousing crash. • Though known for itssocialist andcommunistfoundations, theadoption of capitalistprinciples is creditedfor some of the growth. |
|
|
Gross Domestic Product (GDP)
|
Total value offinal goods and services produced in a country in agiven year. As long as a company is within acountry’s border, their numbers go into thecountry’s GDP (even if they are foreign-owned)
|
|
|
Unemployment Rate
|
The percentage ofcivilians at least 16-years-old who are unemployedand tried to find a job within the prior four weeks.
|
|
|
Four Types of Unemployment
|
1. Frictional: people that quit work becuase they didn't like the boss, job, or working conditions. Also includes people entering job market for the first time.
2. Structural: caused by restructuring of firms or mismatch of skills between job seekers and employment oppurtunities. 3. Cyclical: due to recessions 4. Seasonal: demand for labor varies over the year in some industries. |
|
|
Inflation
|
The general rise in the prices of goodsand services over time.
|
|
|
Disinflation
|
When the price increases are slowing(inflation rate declining).
|
|
|
Deflation
|
When the price increases are slowing(inflation rate declining).
|
|
|
Deflation
|
Prices are declining because too fewdollars are chasing too many goods.
|
|
|
Stagflation
|
Economy is slowing, but prices aregoing up.
|
|
|
Consumer Price Index (CPI)
|
Monthly statisticsthat measure the pace of inflation or deflation
The wages, rent/leases, tax brackets,government benefits and interest rates of somecitizens are based upon the CPI. |
|
|
Producer Price Index (PPI)
|
An index thatmeasures prices at the wholesale level.
|
|
|
PRODUCTIVITY
|
U.S. has risen due to thetechnological advances that have madeproduction faster and easier.
Productivity in theservice sector growsmore slowly becauseof fewertechnologies. The higher the productivity, the lower the costs ofproducing goods and services. This helps lowerprices. New technology adds to the quality of theservices provided, but not to the worker’s output. • A new form of measurement needs to be createdto account for the quality as well as the quantityof output.
|
|
|
Business Cycles -
|
Periodic rises and falls thatoccur in economies over time
|
|
|
Four Phases of Long-Term Business Cycles:
|
1. Economic Boom
2. Recession – Two or more consecutive quartersof decline in the GDP. 3. Depression – A severe recession. 4. Recovery – When the economy stabilizes andstarts to grow. This leads to an Economic Boom. |
|
|
Fiscal Policy
|
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending.
Tools of Fiscal Policy:- Taxation- Government Spending |
|
|
National Deficit
|
The amount of money thefederal government spends beyond what it gathersin taxes.
|
|
|
National Debt
|
The sum of government deficitsover time
|
|
|
National Surplus
|
When government takes inmore than it spends.
|
|
|
Monetary Policy
|
The management of themoney supply and interest rates by the FederalReserve Bank (the Fed).
The Fed’s most visible role is increasing andlowering interest rates.- When the economy is booming, the Fed tends toincrease interest rates.- When the economy is in a recession, the Fedtends to decrease the interest rates |
|
|
Who is Matt Flannery |
Co-founder and CEO of Kiva.org Started as a software developer, eventually got into microlending: providing small loans to build businesses. also relies on crowdfunding |
|
|
Perfect Competition |
The degree of competition in which there are many sellers in a market and one is large enough to dictate the price of a product. |
|
|
monopolistic competition |
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different. |
|
|
oligopoly |
A degree of competition in which just a few sellers dominate the market. |
|
|
monopoly |
a degree of competition in which only one seller controls the total supply of product or service, and sets the price |
