Basic Concepts Pt.1
What does "public" most accurately mean when referring to public goods and services?
goods provided by the government
what is a major concern when the government spends more than it collects?
increase in national debt and interest payments
standard of living refers to...
what is the Federal Reserve
the central bank of the United States
what is the balance of trade
the value of exports minus the value of imports
what are the two characteristics of public goods?
non-rival and non-excludable
what is fiscal policy
government decisions about taxation and spending
GDP measures
the total value of all goods and services produced in a country
what are the Fed's main goals
price stability and low unemployment
what does the level of trade measure
the percentage of production in a country that is exported
why is private property essential for a market economy?
it gives people something to exchange in markets
how does government spending affect the circular flow of the economy?
it injects money which increases productivity and employment
what is considered a healthy unemployment rate
around 4%
how does lowering the federal funds rate affect the economy
encourages borrowing and spending
how can trade lead to potential job losses domestically
by shifting production to countries with lower labor and resource cost
private property promotes conservation because...
people are motivated to care for what they personally own
what is the effect of raising taxes on the circular flow of money
productivity, employment and prices generally decrease
people who have left the labor force
consumer spending habits
what is a trade agreement
pact mad by governments to establish a trade relationship
what are the three main macroeconomic goals for most governments?
growth in standard of living, low unemployment, and low inflation
what are the four components used to calculate GDP
consumer spending, investment, government spending, net exports
How is economic growth measured
what is the opposite of free trade?
protectionism