Basic Economic Principles
A pizza oven is an example of a ____________ for a small business owner.
What is a fixed cost?
____________ is what happens when prices rise but wages do not keep up, essentially causing a decline in the value of the dollar.
What is inflation?
The government's efforts to influence and maintain economic stability in the private sector through legislation, spending policies, and taxation.
What is fiscal Policy?
People who buy goods are called ____________ while people who make goods are called _____________.
What are consumers and producers?
In the modern world, countries rely on each other for goods and services. Most countries cannot produce everything they need, so they trade with others. This creates a global system where countries depend on one another called ___________________.
What is interdependence?
These are determined by how an increase in production will affect the business.
What are Marginal Costs?
The ___________ oversees much of the day-to-day management of monetary policy by monitoring and adjusting the money supply to meet the needs of agriculture, commerce, and industry.
What is the Federal Reserve?
______________ is a system of taxation that places a higher burden on low income people by taxing everyone equally (which amounts to poor people paying a higher percent of their income), while ____________ is a system of taxation that forces people with higher incomes to pay a greater percent of their income in taxes, leveling the playing field to some extent.
What is Regressive and Progressive Taxation?
A __________ economy is when a country depends mostly on one natural resource. This happens when that resource is found in large amounts in that country but ca make the country too dependent on that one resource. A ___________ economy means that a country makes many different goods and services. This helps keep the economy stable if one industry has problems and helps create more types of jobs for people.
What is a single-resource economy and a diversified economy?
The __________ _____________ shows how much one country’s money is worth in another country. These help make sure the value of goods stays the same when buying or selling between countries. A country's _______ ___________ ____________ is the total value of all goods and services a country makes and sells in one year. It helps economists understand how big and healthy an economy is because jobs and business activity usually grow when GDP grows.
What are exchange rates and GDP (gross domestic product)?
Wages, the cost of cheese for a pizzeria, and the cost of gasoline are examples of _______________ because they can change and depend on larger economic factors.
What are variable costs?
__________ and ____________ are two steps that the Fed might take to try to fight inflation.
What is decreasing the supply of money or raising interests rates?
These are a) 2 laws/government agencies that protect consumers and their purpose and b) two laws that were passed to limit monopolies and their purpose.
What is the Consumer Product Safety Commission (protects against unsafe products and tests new products before they are introduced to the market), and the Federal Communications Commission (Protects against telephone or television advertising fraud) and What is the Sherman Antitrust Act (outlawed monopolies), the Clayton Antitrust Act (regulated mergers between large companies), and the Federal Trade Commission (regulates and sets standards for fair business practices)?
Programs governed and funded by permanent law such as Social Security, Medicare, Medicaid, Unemployment, and Veterans’ programs receive _____________ and have spending levels that only change when a major policy change occurs. Funding for programs with spending that is determined annually by Congress and the President (including defense, education, transportation, space programs, public housing, and law enforcement) is __________________. All of these programs are primarily funded with ____________.
What is mandatory funding, discretionary, and taxes?
These are two examples of trade blocs that currently exist in the world, the regions that they are associated with, and the purpose that trade blocs serve to member countries.
What is the EU (european union covers most of continental Europe's countries) and the USMCA (formerly known as NAFTA covers the US, Canada and Mexico), and what is they loosen trade restrictions between these countries in a way that is mutually beneficial to the domestic economies of everyone involved?
___________ and ____________ have an inverse relationship in economics, which means that as one increases the other tends to decrease, and vise-a-versa.
What are supply and demand?
Three things that are indicators to the Fed about how the economy is doing and what they are.
a) GDP- the money value of all goods and services produced by a country in a given year, measures how well the economy is growing or not.
b) unemployment- the rate of people who want to find a job but are unable. Never 0%
c) Stock Market- if the stock market is doing well, buisiness is thriving and growing and money is available.
d) inflation- never 0%, can I buy as much now with the same amount of money as I could a year ago?
These are 3 different business regulatory agencies and what they are tasked with regulating.
What is the EPA (regulates pollution and environmental issues related to business), FTC (protects the idea of market competition among businesses), and the SEC (regulates stock sales to ensure fairness and integrity)?
These are the three main steps of the federal budget process.
What is federal agencies create budgets that they present to the president, the president creates a federal budget proposal that he sends to Congress for approval, and Congress debates and approves or disapproves of the president's proposal?
When the value of a country's currency grows, it is called ____________. When the value drops, it is referred to as ______________. These fluctuations in the value of countries currencies can mean that the ____________ ______________ of consumers in those countries, or their ability to import products from foreign countries, will rise or fall accordingly.
What is appreciation, depreciation, and purchasing power?
a) An economic system that believes that the economy should not be controlled by the government or external forces, b) an economic system that believes that the government should have complete control over all of the countries land, production, and resources so that distribution is more fair to the people, and c) an economic system that combines a and b to find a balance between free enterprise and being fair to all people.
What is a free market or market economy, what is a command economy, and what is a mixed economy?
Two ways that the FED uses monetary regulation to affect the economy and inflation.
What is changing money supply and changing interest rates (tightened money supply means lower inflation, higher interest rates means less borrowing and less inflation)?
This is a) the result of the government lowering tax rates and some positive and negative consequences, and b) the result/positive and negative consequences of raising the tax rates.
a) What is lower tax rates give individuals and businesses more money to spend and invest, which raises demand for goods and services, which leads to economic growth and potentially inflation (if there is too much demand and a rise in prices)?
b) What is higher tax rates reduce the money available for spending and investment, which lowers demand for goods and services, which can slow economic growth, and potentially help reduce or control inflation?
____________ are items a country buys from other countries to use at home. Countries do this when they cannot grow or make these goods domestically, like cocoa beans in the United States. __________ are goods a country sells and sends to other countries to make money. Countries do this with goods that are easy or efficient for them to produce, which is called _______________________ (two words).
What are imports, exports and competitive advantage?
A _________ ____________ occurs when a country imports more than it exports (called a ___________ ______________) OR exports more than it imports (called a __________ ____________). The former causes the value of the country's currency to ___________, while the latter will cause the value of the country's currency to __________. ____________ are one way that the government can try to fix an economy that imports more than it exports by making imported products more expensive than goods made domestically, but critics say that these only raise prices and create extra costs for consumers.
What is a trade imbalance, a trade deficit, a trade surplus, decline, increase, and tariffs?