The Economic Fundamentals
the study of how individuals and societies use their limited resources to satisfy their unlimited wants.
Economics
_______ is the amount of a specific good or service that's available in the market. ________ is the amount of the good or service that customers want to buy
supply, demand
Why is saving important (identify two reasons)
Social Security, Medicare, and Medicaid are all part of ____________ spending in the federal budget
Mandatory
Measurement of the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time
GDP
the three factors of production
land, labor, capital
1. Gasoline is an example of a __________ good because it has few alternatives since people with a car need to buy petrol. The quantity demanded will not change much with a price change.
2. Clothing and electronics are considered _________ goods because there are many different alternatives available. The quantity demanded could change dramatically with a price change.
1. Inelastic
2. Elastic
The difference between sole proprietorship, partnership, and a corporation.
Sole proprietorship- someone who owns a business by himself or herself.
Partnership- form of business where two or more people share ownership
Corporation- a business entity that is owned by its shareholder(s)
Let's say a city wants to widen an existing road. To do this, the city government would need to pave part of the road in what is now your front yard. They can legally do this but they must pay you fair market value for your home. This is an example of
Eminent Domain
Jimmy works at the water park during the summer. When summer is over the water park shuts down and Jimmy no longer has a job. This is an example of what type of unemployment?
Seasonal
the value of the next-best alternative is referred to as..
Come up with an example
Opportunity Cost
Factors that can shift supply (identify two)
1) prices of factors of production, (2) returns from alternative activities, (3) technology, (4) seller expectations, (5) natural events, and (6) the number of sellers
The three basic functions of money
A medium of exchange, a unit of account, and store of value.
What is the purpose of taxation. What do our taxes pay for?
Taxes provide revenue for federal, local, and state governments to fund essential services--defense, highways, police, a justice system--that benefit all citizens
Identify two pros and two cons of global trade
Pros: Access to New Markets. ...
Spread of Knowledge and Technology.
Enhanced Global Cooperation and Tolerance.
Promotes Economic Growth.
Cons: Exploitation of Labor and Resources.
Imbalanced Trade.
Domestic Job Loss
Potential loss of local culture
The two factors that determine that impact a nations wealth. Briefly describe each
healthy institutions- property rights, honest government, political stability, dependable legal system, and competitive and open markets.
Trade- productive and fair trade relationships with other countries
Factors that can shift demand (identify two)
Change in Taste and Preferences.
Population Increase or Decrease.
Price Change of a Related Good.
Change in the Expected Future Prices.
Change in the Income Level of Buyers.
What is a wage gap? Provide an example
the difference between the average pay of two different groups of people, for example men and women
The principle that states the amount of tax an individual or organization pays should be relative to the amount they earn
the ability to pay principle
Causes of a recession (name two)
loss of consumer confidence, high interest rates, a stock market crash, and asset bubbles bursting (ex: home values)
Name the four different economic systems that we covered this year and briefly describe each
Market- economic system where two forces, known as supply and demand, direct the production of goods and services.
Command- requires that a nation's central government own and control the means of production.
Traditional- an economic system in which traditions, customs, and beliefs help shape the goods and services the economy produces
Mixed- economic system that combines aspects of both market and command economies
What is a price floor and what is a price ceiling. Give and example of each.
Price floor- the lowest legal price that can be paid in a market for goods and services, labor, or financial capital. Example: Minimum wage
Price ceiling- keeps a price from rising above a certain level. Example: Rent controls, which limit how much landlords can charge monthly.
There are six characteristics of money. Name all 6 of the characteristics
divisible, portable, acceptable, scarce, durable, and stable in value
The difference between a progressive and regressive tax.
Give an example of each
Progressive- takes a larger percentage of income from high-income groups than from low-income groups and is based on the concept of ability to pay. Examples: our income tax system.
Regressive- one where the average tax burden decreases with a rise in income. Examples: taxes on tobacco, alcohol, gasoline.
Three measurements we can use to analyze economic health and what do they tell us?
GDP- is important because it gives information about the size of the economy and how an economy is performing (Growing or shrinking)
Unemployment rate- how many people are employed vs. those that are not.
Inflation rate- is the rate at which prices for goods and services rise. High inflation is bad because consumers have less purchasing power. Low inflation or deflation could mean less revenue for business which means more unemployment.