Economics Fundamentals
This is the study of human behavior based on incentive (or the study of how people and societies produce, how they produce, and how they distribute it).
What is economics?
What is a mixed economy?
This is the rule that as the price of a good increases, the demand for that good decreases.
What is the law of demand?
This is the term for all people who are working or actively (in the last 4 weeks) looking for work.
What is the labor force?
This is the central bank of the United States, of which the board is made of of 7 appointed officials.
What is the Federal Reserve Bank?
This is one of the core realities of economics, in which the demand for something is greater than the supply.
What is scarcity?
In a command economy, this group makes all economic decisions.
What is the government?
If supply increases and demand stays the same, then this has happened to the market-clearing price.
What is decreased?
This is the measurement of the average increase of prices over time, and it is calculated using the Consumer Price Index.
What is inflation?
The Federal Reserve Bank has several tools to add or subtract from the amount of money circulating in the economy. The exercise of these tools is known as this type of policy.
What is monetary policy?
This is the value of the next best option in any given decision.
What is opportunity cost?
In this economic system, companies that are not innovative or that do not produce what is demanded will fail, losing out to competition.
What is a market system?
If the demand for a good decreases and supply stays the same, then market-clearing price has done this.
What is decreased?
GDP can give a picture of overall economic productivity, but to better understand the standard of living in a country, economists might use this measurement that divides the GDP by the total population.
What is GDP per capita?
If the Fed wanted to contract the economy through open-market operations, they could do this.
What is sell bonds?
This is the fundamental question of economics.
What is How to allocate scarce resources in the face of infinite wants and needs?
What is a traditional economy?
This is the term for when there is more of a good supplied than there is demand for that good. In order to clear supply, suppliers would need to lower their price.
What is a surplus?
Colorado charges a 4.4% income tax for all salary earners, regardless of income level. This is this type of tax.
What is a proportional (flat) tax?
If the Fed wants to expand the economy through the Reserve Rate, they could do this to the rate, which would allow banks to keep less cash on hand and thus invest more and give more loans.
What is lower the Reserve Rate?
He wrote "The Wealth of Nations" in 1776, recording observations about the transition that was occurring from mercantilism to capitalism, laying out the case that international free trade was beneficial to all.
Who is Adam Smith?
These are the three questions that all economic systems must answer.
What to produce, how to produce, and for whom to produce it
Jeffco just announced a raise for all teachers! Assuming teachers were eating a lot of ramen noodles before the raise, this is what just happened to the demand for ramen noodles.
What is demand has decreased (inferior good)?
High unemployment and decreasing GDP indicates that the economy is at this point in the business cycle.
What is a recession?
The Discount Rate is an interest rate (specifically the interest rate for banks to borrow money from the Fed). In order to contract the economy, the Fed could do this to the Discount Rate.
What is raise the Discount Rate?