Unit 1
Define the fundamental economic problem.
What is to allocate finite resources to efficiently address infinite wants?
As the price increases, demand decreases.
What is the Law of Demand?
Making a purchase now and promising to pay it back later.
What is buying on credit?
The federal government's largest spending category.
What is the mandatory spending?
What are trade agreements?
What is opportunity cost?
The point on the graph where supply and demand intersect.
What is the point of equilibrium?
Buying stocks or bonds, purchasing property, or opening an interest earning account, are examples of what
What is investing?
Intermediate goods and goods made by a US company in Canada are both examples of what?
What are items not counted in GDP?
The ability to produce a product relatively more efficiently.
What is comparative advantage?
An economic system where consumers and businesses choose what they want to buy/sell.
What is capitalism?
What is a free market economy?
According to this, if the price of a good increases the quantity provided will increase.
What is the law of supply?
A progressive tax levied on money earned through working, it is paid once a year to the federal and (most) state governments.
What is an income tax?
The 4 main phases of the business cycle
What are expansion, peak, contraction, and trough?
Per Capita GDP, energy use, workforce, and social indicators(i.e. life expectancy, literacy rate, infant mortality) are used to distinguish these kinds of nations.
What are developed nations and less developed nations?
Define point x
What is an inefficient allocation of resources?
If at every price consumers will demand different quantities of goods, this has happened.
What is a change in demand or shift in the demand curve?
A $100 dollar tax charged to every person is an example of this.
What is a regressive tax?
The use of government spending and revenue collection to influence the economy
What is fiscal policy?
Faster transportation and communication, expansion of a free market system, and trade agreements have all caused this phenomenon.
What is globalization?
Because of this, people are induced to invent, innovate, and take risks that they may not otherwise pursue.
What is the profit motive?
Defined as a change in price that results in a relatively larger change in quantity demanded.
What is elasticity > 1 or an elastic good
Payment timing, employment history, and income can all impact this.
What is a credit score
School of thought that the government could make up for the drop in private spending by buying goods and services then that would encourage production and increase employment and eventually private spending
What is Keynesian economics?
Name 3 barriers to development.