Download the us economic system

THE US ECONOMIC SYSTEM
Basic Economic Concepts
-Economics: _________________________________________________________________
-Consumer:__________________________________________________________________
-Goods: products that are purchased and eventually used up
-Consumer goods:_____________________________________________________
-Capital goods: used to produce; tools and machinery
-Services:___________________________________________________________________
-Producer: someone who makes the goods or provides the service
Four Factors of Production
-Land: natural resources
-Labor: human resources
-Capital:____________________________________________________________________
-Entrepreneurship: ____________________________________________________________
Four economic questions to ask
-What goods and service will be produced?
-How will they be produced?
-Who gets the goods and services?
-How much will be produced?
-Trade-off: what you could be doing
-Scarcity:_________________________________________
_________________________________________________
-Opportunity Costs:_________________________________
-Demand:_________________________________________
-Law of Demand: when the price of a product or service goes up, the demand for the product will
decrease
-Supply:__________________________________________
-Law of Supply: when the price of a good or service goes up, the supply will also rise
-Surplus: when supply is greater than demand
-Shortage: when demand is greater than supply
Economies:
-Command Economy: _______________________________
-Market Economy:__________________________________
-Mixed Economy:__________________________________
-Tradition Economy:________________________________
Market Economy:
-Adam Smith’s book The Wealth of Nations
-Invisible hand: when individuals are left alone to act in their own self interest, the
economy will benefit
-laissez-faire:_________________________________
-Profit motive: ________________________________
-Capitalism: Private property, profit motive, competition, freedom of decision
Mixed Economy:
-Capitalism with some government intervention, US is a mixed economy
International Trade:
-Free Trade between Mexico, US, Canada:_______________________________________
-Advantages: all nations use resource more wisely
-Disadvantages: home businesses threatened with loss of jobs, cheaper imports
-NAFTA: North American Free Trade Agreement
-Between ________________________________
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-NATO: North Atlantic Treaty Organization:
-Between________________________________
-WTO: World Treaty Organization
-Between________________________________
-EU: European Union, __________________________
-Balance of Trade: when the amount of goods and services bought and sold between two nations is
exactly the same
-Trade deficit:___________________________________
-Trade surplus:___________________________________
-Tariff: tax on imported goods
-Quota: sets a limit on the number of imports allowed
-Embargo: ban on trade with a specific country
Business Cycle:
-Trough:__________________________________________
-Expansion:_______________________________________
-Peak:____________________________________________
-Contraction:______________________________________
Types of Businesses:
-Sole Proprietorship: single owner, or married couple; has all costs and responsibilities
-Partnership: 2 or more owners share in wealth, responsibility
-Corporation: many owners (stock holders), share in wealth, little decision involvement
Stock market: where buying and selling of stock takes place
-Bull market: stocks are up, selling fast, high dollar
-Bear market: stocks are low, low dollar, slow economy
Labor Unions: organization formed to protect interest and safety of workers
-Collective bargaining: unions and employers negotiate conditions of employment
-Strike:___________________________________________
-Mediation: a neutral person help both sides reach a compromise
-Arbitration: when a third party makes a final decision for both sides
-Picketing: boycott, right-to-work laws
-Open shop:_______________________________________
-Closed shop: only labor union members can work
Types of Competition in the economy
-monopoly: _______________________________________
-Pure competition: a market with many sellers who produce an identical product
The Health of the Economy
-Inflation: increase in price over a period of time
-Unemployment rate:________________________________
-Gross Domestic Product (GDP): total yearly output of goods and services produced.
-measures the market value of all goods and services, best indicator of the health of the
economy
Per Capita Income: average income per year for a region, country
Remember with graphing: Demand line goes down, Supply line goes up!!!!!!!
Taxes: regressive taxes are lower % the less you earn
Progressive taxes are higher % the more you earn
Voluntary: example would be the Lottery
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