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Transcript
Economics Semester Review! Everything YOU ever wanted to remember… and COULD!!! Introduction Unit What are the three (3) economic questions? What to Produce How to Produce it For Whom to Produce Explain a traditional society. Repetition of tasks based on the past and distributed by a strict hierarchy. Explain a command economy. Strong government role in the economy. Explain a market economy. Prices and the products manufactured are based on supply and demand/ What is the definition of scarcity. limited resources versus unlimited wants What do you love? Economics of course! Individuals who make purchases are know as? Consumers The creators of an new business is known as an? Entrepreneur Level of output which results from the level of input is the definition of what? Productivity What is another word for utility? Usefulness Supply and Demand Explain diminishing marginal utility. the more you have of an item – the less satisfaction you get with each additional item. List two (2) determinants of supply. Price of resources Technology Government tools Price of other goods Producer expectations List two (2) determinants of demand. Substitute and complementary goods market size income future expectations tastes and preferences Explain demandpull inflation Prices rise due to the increased demand for goods Supply-side economics gives tax incentives to whom? Business What is the point where supply and demand intersect? Market Clearing Price or Equilibrium Point When there is a shift increase in demand. (Which way does the line move?) Right When there is a shift increase in supply. (Which way does the line move?) Right People love straw hats! A hurricane hits wiping out palm trees. What is the impact of the hurricane on the supply and demand for hats? Decrease in Supply Economic Indicators Name the three (3) types of economic indicators. Leading Coincidental Lagging What are the four (4) types of unemployment. Cyclical Frictional Seasonal Structural List the four (4) phases of the business cycle. Expansion Peak Contraction Trough What is the current unemployment rate? 6.7% What is a problem that occurs with inflation? Prices go up faster than wages – The same $ now buys less. Give and example of frictional unemployment. Just in between jobs Give an example of cyclical unemployment the steel industry collapses and put people out of their jobs Give an example of structural unemployment The new selfcheckout lines at Jewel Define Inflation An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar. Define Deflation A decline in the general price level of goods and services that results in increased purchasing power of money. Give an example of a leading indicator. Housing starts Prices of raw materials Numbers of orders for capital and consumer goods What type of an indicator is unemployment? Coincidental Fiscal / Monetary Policy What is the purpose of the Federal Reserve? Bank for banks What is included in M1? Currency Checking Accounts (Demand Deposits) Traveler’s Checks What is included in M2? All of M1 plus: – Savings – Money Market – CD’s List the tools of monetary policy. Open Market Operations Discount Rate Reserve Rate Margin Requirements Credit Regulations Moral Suasion Explain Moral Suasion Federal Reserve encourages strongly what is best for all Define Fiscal Policy Practices of government spending and taxes Define Monetary Policy The Federal Reserve policy to regulate the nation’s money supply and credit What are the three (3) types of taxes? Progressive Proportional Regressive Why does the government tax? To redistribute money throughout society Pay for services What are taxes based on? Income List where tax revenues come from. Individuals Corporations Property Social Security Sales What is an example Sales of a regressive tax? List the characteristics of money? Recognizable Durable Portable Divisible Acceptable Limited Supply What is the U.S.’s money backed by? Trust in our government and it’s ability to collect taxes How many districts are in the Federal Reserve System? 12 Who carries out Monetary policy? The Federal Reserve Who carries out Fiscal Policy? The President and Congress What is the largest Federal Budget expenditure? Social Security Who is the chairman of the Federal Reserve? Ben Bernanke What services does the Federal Reserve provide for the government? Financial advisor Checking account for the U.S. treasury pays social security checks, tax refunds, veteran payments, etc. Issuing Currency What services does the Federal Reserve provide for member banks? Clearing checks Loans to banks Transfers deposits from one account to another Supervise lending practices Using a Tight Money Policy would you buy or sell government securities? Sell Using an Easy Money Policy what actions would the Federal Reserve take? Lower the Discount Rate Lower the Reserve Requirement Buy Government Securities (Bonds) Explain the Discount Rate. The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank. International Economics Who makes economic decisions in the former Soviet Union? National or political leaders What are two (2) characteristics of developing nations? Low GDP Per Capita Few Resources Growing population Agriculture based economy What was Marx’s view of capitalism? It would destroy itself. Eventually the people would want to create a classless society What social class do the bourgeoisie belong to? Upper Middle Class What percentage of nations are “developing?” 86% What did NAFTA accomplish? A reduction and eventually elimination of tariffs between countries. An increase in trade between countries. List two (2) countries that are communist today. North Korea China Vietnam Cuba Name two (2) types of foreign aid. Grants Advice United Nations World bank International Monetary Fund Private Investment (Corporate) Explain absolute advantage. Cheaper and efficient What is the goal of creating the European Union? A single regional economy of member nations. What are the benefits of globalization? lower tariffs lower prices specialized labor increased competition