Unit 1
How does scarcity occur?
When our wants are greater than the resources we have to satisfy them
What does the law of demand state?
That when the price goes up the quantity demanded goes down, and when the price goes down the quantity demanded goes up
What is a fixed cost?
A cost, or expense, that is the same no matter how many units of a good are produced
What are three functions of money?
1. Medium of exchange
2. Unit of account
3. A store of value
What is price index?
A measure of the price level, or the average level of prices
What are the two major economic systems?
Free enterprise, Socialism
What does the law of supply state?
That as the prices of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the god decreases
What are the three Characteristics of Market structure?
1. Number of sellers in the market
2. The product that sellers produce and sell
3. How easy of difficult it is for the new firms to enter the market
What are required reserves?
The minimum amount of reserves a bank must hold against its deposits as mandated by the Fed
What is Unemployment rate?
The percentage of the civilian labor force that is unemployed
What are five features of Free Enterprise?
1. Private property
2. Choice
3. Voluntary exchange
4. Competition
5. Economic incentives
What are price controls?
price ceiling, price floor
What are two factors that will make the demand for your labor services high?
1. The demand for the good you produce
2. Your productivity
What is the Federal Reserve System?
The board guides the operation of the Federal Reserve System to promote the goals and fulfill the responsibilities given to the Federal Reserve by the Federal Reserve Act
how does Cost push inflation occur?
When an increase in the price level originates on the supply side of the economy
The science that studies the choices of people trying to satisfy their wants in a world of scarcity
What is M.E.R.I.T. ?
Market size/number of buyers
Expectations of future price
Related good's prices
Income
Tastes and preferences
What are five cost concepts?
1. Fixed cost
2. Variable cost
3. total cost
4. Average total cost
5. Marginal cost
What are the three types of Bonds?
1. Treasury Bond
2. Municipal Bond
3. Corporate Bond
what are the five parts of a business cycle?
1. Peak
2. Contraction
3. Trough
4. Recovery
5. Expansion
What is Globalization?
A process by which individuals and businesses in any part of the world are much more affected by events elsewhere in the world than they used to be
At a certain price, quantity demanded and quantity supplied are equal
What are the characteristics of an Oligopolistic market?
1. Has few sellers
2. Firms in the market produce and sell either identical or slightly differentiated projects
3. The barriers to entry are significant
What does the Fed do?
control money supply, supply the economy with paper money or federal reserve notes, Hold bank reserves, Provide check clearing services, Supervise member banks, Serve as the lender of last resort for banks suffering cash management problems
What are the two types of Fiscal Policy?
1. Expansionary Fiscal policy
2. Contractionary Fiscal policy