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37 Cards in this Set
- Front
- Back
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According to Miller & Benjamin, why do countries with greater political freedom tend to have a greater economic prosperity?
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Property rights and institutions are present, as well as a free market system in which everyone who participates benefits.
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How are saving and investment linked?
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investment can't exist without at some point being a savings. S=I
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What is investment to an economist?
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Putting money down for production of capital
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Is a Ford minivan manufactured in Canada considered to be part of US GDP?
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No. GDP describes products specifically built in the US.
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What is per capita GDP and what does it tell us?
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"per person" GDP, it gives us a better perspective not he standard of living
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According to Heilbroner, give 1 example of how technological change has affected society.
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-Urbanization
-Interdependence *Sociological effects |
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Why has the labor force participation rate increased over the past fifty years?
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A rise in participation of women due to the other circumstances like advancement in learning, contraception...etc.
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What are economies of scale and how do they affect production?
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Larger production = smaller cost
produce incentive to engage in large scale production |
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What is the main idea of Bruce Bartlett's "Underground Dwellers"?
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Underground economy-or under the table work-is not seen in GDP and is growing due to high taxes
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Are textbooks sold at Flagler bookstore part of GDP?
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No! Books aren't being produced
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Price paid by German tourist when staying at a NY hotel part of GDP?
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Yes! In US and produced by US.
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Are Cars made at a GM factory in Germany part of GDP?
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No! Not made in the US
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Is the price paid by an American tourist staying at a Berlin hotel part of GDP?
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No! Not in US and not directly benefitting US.
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Are trucks made at a Toyota factory in Alabama part of GDP?
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Yes! Made in the US
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What is the free market?
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people are permitted to buy and consume without government interference
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What is used to calculate GDP using national expenditure approach?
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Gross Private Investment (I)
Net Exports (NX) or (exports - imports [x-m]) Government Purchases (G) Household Consumption (C) |
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What is the rule of 70?
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Determines how long it takes for money to double. 70/rate of growth
ex: 7%-70/7 |
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Population = 30M, only 200M are at least 16y.o. & not institutionalized, 50M of the 200M aren't working/looking for work, 10M of the 200M are looking but can't find work.
-unemployment rate? -labor force participation rate? |
-6.6% (10M/150M) (looking but can't find/working)
-75% (150M/200M) (looking but can't find work+working/able to work) |
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If you inherit $10K this year and invest your money so that it grows 7% each year, how many years will it take for your investment to be worth $20K? $40K? $160K?
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a. 10 years (70/7=10)
b. 20 years c. 40 years |
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How does a market society prevent self-interested, profit hungry meant from holding up their fellow citizens for ransom?
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Competition-every person is out to do the best for themselves, facing similarly motivated people, eager to take advantage of his competitor's greed-urging the competitor to raise the price above the "set" market level. Ex: Employee asking for more than the going wage won't find work.
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I, Pencil
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Let the free market do what it does best and don't interfere...as humans we cannot acquire/know/control the production of things/market system-not by ourselves
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Intermediate good
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not GDP-sold as part of another good- tire on a new car, typically used in production of final goods and services-not direct sources of utility themselves
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What motivates individuals in modern America to "mobilize their human energy for productive purposes"?
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Incentive is the driving motivation for work- usually incentive to make a profit.
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In Economics 101, what is the lesson of 5mph speed limit?
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search
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List and define the 3 categories of resources used in an economy to produce goods and services
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labor-work, human effort
capital-assests useful in production-usually man made land-natural resources (crop. water) |
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What is scarcity in the economic sense?
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When people want more of something that is not made readily available
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What will happen to the demand curve for Marshmallow fluff if the demand increases?
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If the demand for Fluff increases, the demand curve will shift to the right.
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If the price of marshmallows rise, the remade for them will decrease-what will happen to the demand for Fluff, it's substitute?
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The demand for Fluff will increase
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Difference between fiscal policy and monetary policy? Examples?
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Fiscal policy changes government spending- +spending -taxing
Monetary policy is changing money supply-adding $ into economy |
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Evaluate- "Poverty in the US is increasing each year"
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The # of people defined as poverty stricken in monetary numbers is growing, but the # of people who are poverty stricken by standard of living is improving.
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Outsourcing, bad or good for the US?
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beneficial to Americans and those who provide service, other, better US jobs are made available and lower product prices by competition & benefits local businesses
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What "ancient fallacy" did Sowell refer to in his article?
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Politicians like to create an illusion that good things will be provided, freely and without cost to keep public views of them positive. Ex: price control of gas in Hawaii, not being put into effect until after elections so politician looks better.
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Define money and what is included in that. Who creates it and how?
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Money = purchasing power-cash, checking accounts, bills...
Federal reserve makes money by buying/selling bonds from the banking system-putting reserves into the banking system |
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Stagflation? Why does it present a policy dilemma?
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When inflation and unemployment are both high.
Causes a dilemma because both fiscal and monetary policy policy can solve only 1 of those problems, but not both. |
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Describe how goods and services are allocated in a market system
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Signals are generated by the market prices
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Primary reason socialism can't work in the real world
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fails to take into account human nature-
-incentive problem -information problem |
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Calculate the tax bill for a person whose income is $50K under the following system
$0-$10K = 0% $10K-$30K = 10% $30K-$80K = 20% Tax paid? |
10K = 0% = 0
20K = 10% = $2000 20K = 20% = $4000 = $6000 $6000/50,000= 12=12% |
