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15 Cards in this Set
- Front
- Back
What are the steps of circular flow of goods and services?
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1. Households sell resources
2. Firms pay households for their resources 3. Firms turn resources into goods 4. Households give payments to businesses. |
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What do households (consumers) and businesses (sellers) have to give to the government?
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Households (consumers) have to give resources and businesses (sellers) have to give goods.
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What do governments do in exchange of goods and resources from consumers and sellers?
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Governments pay consumers with income and payments to sellers. But governments also collect taxes from consumers and sellers and provide services to both.
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What is money?
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Anything that serves as a medium of exchange, unit of account, store of account.
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There are 3 functions of money, what are they?
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1. Medium Exchange
2. Unit of account 3. Store of account |
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Define 3 functions of money.
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1) Medium Exchange: anything that determines value during exchange of goods and services.
2) Unit of account: allow comparison of value of different goods and services. 3) Store of account: money keeps its value if your hold on it. |
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Name all of the characteristics of money.
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1. Durability
2. Portability 3. Divisibility 4. Uniformity 5. Limited supply 6. Acceptabilty |
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Define all the characteristics of money.
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1) Durability: strong enough to hold up to lots of use.
2) Portability: easily carried around 3) Divisibility: easily divided into smaller units. 4) Uniformity: must be uniform (the same) for what they will buy. 5) Limited Supply: rare and easily controlled supple of money. 6) Acceptability: everyone must agree to accept it. |
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There are 3 types of money. Name them.
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1. Commodity Money
2. Representative Money 3. Fiat Money |
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What is commodity money?
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Money gets its value from its physical form.
(What it is made out of) |
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What is Representative money?
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Receipt or certificate that can be traded for a certain amount of a physical item such as gold, silver, oil, water, and food.
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What is Fiat money?
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Money that gets its value from government decree.
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Explain the Law of Demand.
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As prices fall, the quantity needed of a good and service will rise.
- P (Price) & QD (Quantity Demand) have an inverse or opposite relationship. |
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Name 6 reasons that demand curves will shift.
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1. Income
2. Population - # of consumers 3. Prices of substitute (switch) goods. 4. Prices of complementary goods. 5. Consumers future price expectations. 6. Tastes and Preferences. |
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Name 5 determinants of supply.
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1. Cost of Resources
2. Number of Supplies 3. Producers future price expectations 4. Technology 5. Taxes & Subsidies |