Econ Final Flashcards

a one year period that companies and governments use for financial reporting and budgeting.

 If the government spends more than it takes in with taxes for the year

If the government spends less than it takes in with taxes for the year. VERY rare for our federal government.  

when the government changes taxes and spending to achieve an economic or social goal.

Ex. economic goal - helping out during recession, social goal - reducing green house gas emissions

tax on a few specific goods.  Car rentals, hotel rooms,Tobacco, alcohol, gasoline.

REGRESSIVE

tax placed on a specific good that is genuinely deemed as bad for the person, but not illegal. (cigarettes, alcohol, sugary drinks, fast food).  REGRESSIVE

tax that all people pay from their paycheck to the gov’t to pay for older/retired Americans.  PROPORTIONAL

tax placed on many/broad range of goods.  REGRESSIVE

tax on value of property (home, business…)

tax that people pay from their paycheck to the gov’t. The largest part of all the taxes paid to our government  

PROGRESSIVE

the more the government gets involved in the economy the less the private sector(households) get involved. (the more the government does for people, the less likely they are to do it themselves)

the less the government gets involved, the more the private sector does for itself.

the total supply of goods and services produced within an economy at a given overall price in a given period

Goverment cuts taxes on people/businesses to allow them to have more money to spend (increases agg. demand and helps businesses hire more workers)

Downside: usually means deficit and adds to national debt

government raises taxes and causes people to have less money to spend (decreases agg.demand)

government may spend more money to try to stimulate growth (increasing spending on project like building roads, bridges, and other big items)

Downside: means deficit and adds to national debt

The government may spend less money, or may cut federal budgets to lower the amount of money it is pumping into the economy

a tax that has a higher level of impact on people who earn lower incomes

everyone pays the same percentage of their income in taxes no matter if you make a lot or a little in income.

as you make more money, you will pay a higher percentage of your income in taxes

the exchange of goods and services between two or more parties without the use of money

the standard unit of value of a country’s form of money

our nation’s central banking system that is meant to have several goals:

• make banking safer

• helps reach full employment

• helps keep stable prices

controls money supply and interest rates

Federal Deposit Insurance Corporation:

protects bank depositors from losing their insured deposits

top leaders of the FED (5). They control and coordinate major banking polices and provide information/report it to congress

The 12 Federal Reserve Banks and their 24 Branches are the operating arms of the Federal Reserve System. Each Reserve Bank operates within its own particular geographic area, or District, of the United States. (provide services to commercial banks similar to what commercial banks provide for their customers)

BOG and 7 others . Responsible for determining whether to raise or lower the money supply and interest rates

banks only hold a small portion of each deposit - then make loans on the other part (lend out the rest)

• keeps money safe

• expands supply of money by allowing banks to make loans with someone else’s money

ups and downs of economy and GDP

the rate of increase of prices over a given period of time (normal rate: 2-4%)

• lowers value of money

• hurts those who save

• hurts banks lending money

• helps those who borrow money

the overall decrease in the cost of an economy's goods and services. (sign of recession)

a set of actions to control a nation's overall money supply and achieve economic growth

the amount of money that a bank holds to ensure that it is able to meet liabilities in case of sudden withdrawals.

the cash minimum that banks must have on hand in order to meet central bank requirements

funds held at the bank that exceed the Federal Reserve's minimum requirement.

how much banks charge on loans to people/businesses

how much money is in circulation. (high interest rates lead to lower supply - low interest to higher supply)

total amount of money being spent in the economy.

• society’s demand

• higher agg demand means economy is going up

Business Cycle: high point of economy and GDP. (between the end of an economic expansion and the start of a recession in a business cycle.

Business Cycle: economic indicators start to fall (GDP, housing, business earning, and unemployment rises)

Business Cycle: economy bottoms out and starts to improve (before a rise/recovery)

GDP starts to rise again (improving business activity)

an increase in the production of goods and services in an economy - GDP passes old peak and economy is growing bigger than previous

someone who individually owns a business. (they make all the decisions and take all the losses…but make all the profits)

a business that is owned by 2 or more co-owners who share profits and debts of a business

a legal company or group of people that acts as one. (owned by stockholders)

a company that allows people to run and buy a firm

business owner(s) or partners are liable for their comany’’s debts and taxation (you may be forced to use your own personal assets)

if your business fails, courts cannot force you to pay debts with your own personal assets (assets and debts of the business remain separate from personal assets)

certificate of ownership of a small piece of a corporation (a claim in the ownership of a company)

an individual that owns at least one share of an organisation’s capital stock

money paid to the owner of a corporation’s stock - Usually portion of corporation profits (the distribution of a company's earnings to its shareholders)

when stockholders have to pay both income tax, and corporate taxes (corporations pay income tax, then shareholders pay tax of dividends)

members pool resources to benefit all who are involved. (business owned by member-owners)

# of sellers, the product, ease/difficulty of market entry (barrier to entry), control over prices, product differentiation

a process used by businesses to distinguish a product or service from other similar ones on the market

the use of advertising, commercials, promotional giveaways, or other ways of trying to set a product apart from a competitor (other than price)

allow people to have monopolies on inventions (right granted for invention)

allow someone to have monopoly on written works (right granted for written works)

holds assets so that they are safe from creditors or others that might have a claim on them after the grantor's death.

when businesses charge different prices for different people (Ex. age, gener, race) - usually illegal

unintended side effects that can be positive or negative (Ex. safety regulations - makes products more expensive)

the wage level (dollar amount) that is paid to a worker for their service

supply and demand for a worker’s skills/services will determine the wage/salary they receive

the wage level where there is no surplus or shortage of labor. - generally it will be below the minimum wage

the lowest wage per hour that a worker may be paid. - mandated by federal law

the number of unemployed people in the labor force. - as a percentage

organization seeking to increase the wages and improve the working conditions of it’s members

negotiations between the union and the business about pay, benefits, and other work matters

labor unions can stop working in order to try to force businesses about pay, benefits, and other work matters

Many sellers:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

identical products:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

few large companies:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

one seller:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

products are slightly different:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

products are unique:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

no barriers to entry:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

low barriers to entry:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

significant/extremely high barriers to entry:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

price taker:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

price searcher:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

use of advertising and non-price differentiation:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

no advertising:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

Ex. Agriculture commodities(milk, potatoes):

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

Ex. restaurants, hair salons, household items, clothing:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

Ex. car industries and airlines:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

Ex. water, electricity, first class mail:

a. pure competition

b. monopolistic competition

c. Oligopoly

d. monopoly

(may be more than 1 answer)

The willingness and ability to purchase an item

a table that shows the quantity demanded of a good or service at different price levels

a graph that shows the relationship between the price of a good/service and the quantity demanded within a specified time frame (Any time the price changes…the quantity demanded will change)

(supply to the sky, demand to the sand)

as the price goes up - quantity demanded goes down

the more you consume, the less satisfaction you receive from consumption. (lower prices are needed to entice more buying)

a change in the quantity demanded due to price change

a change in the quantity demanded due to an outside factor (other than price)

used in place of another product (competitors)

Commonly purchased items together

How much of a product or a service will be produced and sold.  

as price goes up - quantity supplied goes up

Supply has a direct relationship as opposed to demand (indirect)

a table that shows the quantity supplied at each price