Circular Flow and American Free Enterpise
GDP, Unemployment, Inflation
Fiscal and Monetary Policy
Functions and Characteristics of Money and Savings/investment Accounts
Protectionism vs Free Trade
100
2 of the 4 main roles of government in the American Free Enterprise System are....
a - prevent d - estimate
b - regulate e - tax
c- consume
What is c and b - "Protect," "Provide," "Consume (purchase)," and "Regulate"?
--Think about meat inspection--that's protection and regulation! Consume refers to purchasing on our behalf, and provide is what it sounds like...
100
CHOICE 1: The economic measure that allows us to see what the dollar value of all new things produced yearly in the country is, AND allows us to compare our economic standing to other countries' is... _________
CHOICE 2: the IDEAL unemployment rate is....____to ___%
CHOICE 1: What is "Gross Domestic Product (GDP)"?
CHOICE 2: What is "(2-4)"%?
100
The business cycle measures ___________ over a period of 5 1/2 years.
What is a "Gross Domestic Product (real GDP)"?
100
Name 3 of the 6 characteristics of money....
Word Bank:
alternative, congruent, similar, diverse, uniform, expansive, divisible, limited, charming, acceptable, expensive, worthless, durable
DOUBLE POINTS
What is "Durability," "Portability," "Uniform," "Acceptable," "Divisibility," and "Limited"?
100
This image argues against (free trade or protectionism?)_________________.
What is "Free Trade"?
Or..."Trade Liberalization"
200
Another word for "households" is __________, and another word for "firms" is ______________
a - businesses; consumers
b - individuals; businesses
c - families; farms
d - homes; farmers
What is b - "individuals" and "businesses"?
200
3 requirements for being considered unemployed are...
DOUBLE POINTS
What are "at least 16 years," "willing to work/able to work," "not in jail/hospital," "looking for a job"?
--Remember: to be unemployed there needs to be active searching, willingness, and certain age requirements
200
When there is a recession, the economy is slow, so the government ____________ (cut or raises) taxes and _________________ (increases or decreases) spending.
What is "cuts" or "lowers" and "increases" or "raises"?
200
Functions of Money include: Unit of Account (Standard of Value), Medium of Exchange, and Store of Value.
The ability to buy concert tickets with the money you obtain from working demonstrates the function of ____________________.
What is "Medium of Exchange"?
200
One of the main arguments for limiting trade with outside countries through protectionist policies is.....
a - Comparative advantage principle tells us that we can mutually benefit from trade
b - By eliminating international trade, our domestic businesses will suffer a loss of international clients
c - we should limit trade with other countries to protect US businesses from foreign competition
d - Allowing for free trade through agreements like NAFTA allows US consumers to have diverse products and cheaper prices
What is c - "safety of workers," "poor salary of workers," "protecting US jobs," "protecting US consumers"
OR similar responses that can be justified. Some common protectionism policies are: trade blocs, tariffs, embargoes, and quotas
300
In the Circular Flow model, Households own _____________________ that are desired by firms. Eventually, firms sell _________________ to households.
a - products; resources
b - things; bonds
c - products; goods and services
d - resources; products
What is d - "factors of production (or resources)" and "products (goods and services)"?
--Remember: households are individuals--we sell our labor in exchange for income, but different people have ideas and land that they can rent to businesses too
--Firms make products from the resources bought by individuals.
300
Who does inflation harm the most from the following list?
a - People on a fixed income
b - People without two jobs
c - Businesses and middle class
d - People who pay higher taxes
What is "a - people on a fixed income"?
---Fixed means it stays the same; thus, your wage does not increase as prices increase due to inflation
300
During times of high inflation, the government uses _______________ policy to increase the interest rates of banks on the loans they offer individuals.
a - intrusive
b - fiscal
c - expenditures
d - monetary
What is d - "monetary"?
--Monetary policy affects the banks' rates for us;
--Fiscal policy affects government spending for job creation as well as taxes
300
Functions of Money include: Unit of Account (Standard of Value), Medium of Exchange, and Store of Value.
Comparing the worth of a product using its price demonstrates the function of ____________________.
DOUBLE POINTS
What is "Unit of Account" or "Standard of Value"?
300
One of the main benefits of have free trade with outside countries is...
No word bank provided - 400 pts:)
DOUBLE POINTS
What is "variety of products" or "cheaper products," or "globalization--spread of ideas that can help underdeveloped countries"
OR any similar response that can be justified.
400
4 of the 5 characteristics of the Free Enterprise System are....
Word Bank:
purchaser, consumer, voluntary exchange, limited profit, profit motive, competition, provider, regulator, economic freedom, private property, freedom of speech, protector
What are "voluntary exchange," "profit motive," "economic freedom," "competition," and "private property rights"?
--Think about the hand activity we had!
400
A city has a population of 400 people, half of which are employed part or full time. Among those who remain, only 100 are looking for a job, and the other 100 have given up. The unemployment rate in that city is currently....
What is "33%" unemployment rate?
UR = ( Unemployment rate/ labor force ) *100
--labor force is the number of people who are employed plus those who are unemployed, thus labor force here is 200E + 100UE = 300LF
--( 100U/300LF )*100 = 33%
400
Fiscal policy includes creating a budget for government spending for the entire year. It is decided by _____________ (who?) and ___________________ (who?)
Word Bank:
Uncle Sam, congress, senators, president, citizens, central banks, Barack Obama, Investors
What are the "president" and "congress"?
Alternative answers: executive and legislative branch
400
Bank accounts that require little to no initial deposit and grow with minimal (.01%) interest over time....
What is a "traditional savings account" ?
--Recall: these savings accounts grow very slowly and are used for more immediate goals.
400
The US produces 10 tons of domestic coffee beans and 20 tons of potatoes in a month.
Columbia produces 12 tons of domestic coffee beans and 10 tons of potatoes in a month.
Who has the absolute advantage in Coffee?
What is "Columbia"? --due to it producing more in a month than the US
500
In our circular flow economy, Resources become ____________in the Product Market and Financial Capital (investment money) becomes _____________ in the Resource Market.
a - things; money
b - products; income/wages/rent
c - income/wages/rent; money
d - consumer spending; business profit
What is b - "Products (goods and services)" and "Income, Wages, or Rent"?
--resources are used to make products; investment money spent by businesses is spent on people's wages, rent, or profit in the resource market
500
This economic measure is the best measure of the nation's standard of living. It gives an estimate of the average quality of life of the citizens in the country...
a - GNP
b - GDP
c - GDP per capita
d - Taxable income index
What is "GDP per capita"?
--remember, GDP is overall production value, and per capita means per person....
500
Fiscal and Monetary Policy that is________________ is used to slow money flow in the economy during a peak in inflation. Fiscal and Monetary Policy that is ________________ is used to increase money flow in the economy during a recession.
What is "Contractionary" and "Expansionary"?
--Contractionary --think contracting, reducing flow
--Expansionary--think blowing a balloon, increasing flow
500
An investment account that pools different people's money together, is invested in multiple ways, and can be withdrawn from at an ATM is...
Hint: _________________ __________________
What is a "mutual funds" account?
500
The US produces 10 tons of domestic coffee beans or 20 tons of potatoes in a month.
- When you do the math, you notice that the US has to give up the resources needed to grow 2 potatoes for every coffee plant they grow. However, the US only sacrifices 0.5 (half) of a coffee plant every time it grows a potato plant.
Colombia produces 12 tons of domestic coffee beans or 10 tons of potatoes in a month.
- When you do the math, you notice that Colombia has to give up 0.8 of a potato plant for every coffee plant they grow. However, they sacrifice 1.2 coffee plants every time it grows a potato plant.
Who has the comparative advantage in coffee?
What is "Colombia"? --due to it sacrificing less potatoes for every coffee plant they grow compared to the US