Economics 101
The concept that there are limited resources but unlimited wants/needs.
What is scarcity?
The economic system is characterized by private property rights and economic freedom.
The point at which supply and demand intersect.
What is Equilibrium?
An economic cycle characterized by fluctuations of expansions and contractions.
When the government uses spending and/or taxation to try and influence the economy.
Unlike scarcity, which exists everywhere, all the time, these are temporary.
What are shortages?
This economic system is characterized by high levels of state control.
What is a Planned, or Command, Economy?
The question to ask to determine whether or not a good has an elastic demand curve.
Do I really need this?
Too much money chasing too few goods.
What is inflation?
When the Fed adjusts interest rates and/or the money supply to try and influence the economy.
What is monetary policy?
There are no solutions. There are only.......
What are Trade-offs?
freedom, equity, security & predictability, efficiency, growth & innovation
What are the five economic goals?
The question to ask to determine whether or not a good has an elastic supply curve.
Can I quickly and easily produce more?
structural, cyclical, seasonal, frictional
What are the different types of unemployment?
By buying or selling securities in the open market, this is one of the ways the Fed promotes stable prices in the economy.
What are Open Market Operations?
What is an incentive?
The American economy features a high level of state control but is predicated on free-market principles. This combination of free-market and planned economies is known as this.
What are Mixed Economies?
cost of production, technological improvements, natural disasters, government policies (subsidies, taxes), expectations of future prices
The measurement of the total value of a nation's goods and services.
Gross Domestic Product
A percentage of money that must be kept in a bank's reserves in order to meet customer withdrawls.
What are reserve requirements?
The thing given up as a result of a decision (the next best alternative).
What is an opportunity cost?
According to Adam Smith, this is the unseen force that guides an economy.
What is the Invisible Hand?
consumer tastes & preferences, income, price of related goods (substitutes/compliments), number of consumers, consumer expectations
What are demand shifters?
A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods.
What is the Consumer Price Index?
The interest rate on loans from the Fed to banks.
What is the discount rate?