Unit I: Principles
An economic statement based on objective facts (as opposed to subjective factors or opinion).
What is a normative statement?
When the government creates an artificial maximum price for a good.
What is a price ceiling?
This form of business organization has the greatest ability to raise large sums of financial capital.
What are corporations?
The largest component of GDP.
What is consumption spending?
The federal government receives most of its revenues from this type of tax.
What is the income tax?
This type of economics relates to the big picture of economic principles as opposed to individual choices.
What is macroeconomics?
Taste, Income, Substitutes, and Complements are all possible causes of shifts is this curve.
What is demand?
This type of business is the most common and least difficult to set up but also is on average the least profitable.
What are proprietorships?
The point of the business cycle in which interest rates reach their highest level.
What is a peak?
This organization of 164 member states monitors international trade and trade deals to insure that global trade is "fair and equitable."
What is the World Trade Organization (WTO)?
The fundamental problem we are trying to solve in economics centers around this concept (meaning limited resources).
What is scarcity?
The responsiveness of quantity demanded to changes in price.
What is elasticity?
This is the stage in a company's life cycle in which office space is found and initial investment from venture capitalists, angel investors, and others (who are usually given ownership share in the company) lead the financing.
What is seed financing?
This type of money has its own inherent value.
What is commodity money?
The concept that wealthier, more powerful countries (mostly the U. S., but China is trying) force (intentionally or unintentionally) less powerful countries to abandon their traditions and adopt those of the dominant nation as a result of globalization.
What is cultural imperialism?
The four classical resources are: land, labor, capital, and entrepreneurship - modern economists have added this fifth resource.
What is technology?
The loss of economic efficiency caused by price floors and ceilings.
What is dead-weight loss?
The study of mathematical models of conflict and cooperation between intelligent rational decision-makers, often use by economists to predict the behavior of both consumers as well a oligopoly markets.
What is game theory?
The type of inflation caused by an excess of spending beyond the economy’s capacity to produce.
What is demand pull inflation?
The “Interwar Period” of international monetary policies ended with World War II and the creation of this system that lasted until 1972.
What was the Breton Woods System?
“I couldn’t eat another donut if you paid me.” is an example of this concept.
What is the law of diminishing marginal utility?
Firms care about elasticity because changes in price in relation to elasticity impact this.
What is total revenue?
The economic term for cost advantages that enterprises obtain due to the size of their operation (typically measured by amount of output produced), with cost per unit of output decreasing with increasing size.
What are economies of scale?
The correlation between inflation and unemployment is shown by this famous curve.
What is the Phillips Curve?
This hypothetical model posits that as a nation's economy grows their share of pollution will decrease (as people will demand a better environment as they grow richer.)
What is the Kuznets Curve?