| Question |
Answer |
| Dependent variable lies on the _______ axis |
y |
| Independent variable lies on the ______ axis |
x |
| Interdependent variable is |
The variables are neither depend nor independent. its variables gives information, rather then predict. |
| Demand Curve relates what two component? |
Relates the price and quantity you buy |
| Linear Curve |
The two points remain constant at decrease or increase of value |
| PPF stands for? |
Product Possibility Frontier |
| 2 ways to answer the WHAT, HOW, and FOR WHOM |
1.The invisible hand of a Market Economy 2.Government Intervention and Command Command Economics |
| Command System |
1. There are no private properties
2. Govt. has more to say
3. Price does not play a role in who gets what
4. The leaders (govt) has the say
|
| Market System |
1. Private property rights
2. Industry does have a say
3. Consumers dictate the what, how, and for whom
4. Price is a key
|
| market mechanism |
the use of market prices and sales to signal desired outputs (or resource allocations) |
| scarcity |
lack of enough resources to satisfy all desire uses of those resources |
| factors of productions |
land, labor, capital, entrepreneurship |
| land |
gift from nature, oil, water, air, etc. |
| labor |
1. bodies there are
2. the skills and abilities to produce goods and service
|
| capital |
final goods produced for use in the production of other goods |
| entrepreneurship |
the assembling of resources to produce new or improved products and technologies. |
| Economics |
the study of how best to allocate scarce resources among competing uses. |
| opportunity cost |
1. the most desired goods or services that are forgone to obtain something else.
2. what is given up to get something else. |
| Production Possibilities |
the alternative combination of final goods and services that could be produced in a given time period with all available resources and technology |
| the PPC (Production Possibilities Curve) illustrates what two essential principles? |
1. Scarce Resources
2. Opportunity Cost |
| Scarce Resources |
there a limit to the amount we can produce in a given time period with available resources and technology |
| Opportunity Costs |
we can obtain additional quantities of any desired good only by reducing the potential production of another good |
| Increasing Opportunity Costs |
we must give up ever-increasing quantities of other goods and services in order to get more a particular good |
| efficiency |
maximum output of a good from the resources used in production |
| inefficiency |
a production possibilities curve shows potential output, not necessarily actual output. |
| economic growth |
an increase in output (real GDP); an expansion of production possibilities |
| Basic Decisions |
WHAT to produce
HOW to produce
FOR WHOM to produce |
| market mechanism(economy) |
the use of market prices and sales to signal desire outputs (or resource allocations) |
| laissez faire |
the doctrine of "leave it alone," of nonintervention by government in the market mechanism |
| mixed economy |
an economy that uses both market signals and government directives to allocate (direct) goods and resources |
| market failure |
an imperfection in the market mechanism that prevents optimal outcomes |
| government failure |
government intervention that fails to improve economic outcomes |
| Macroeconomics |
the study of aggregate economic behavior, of the economy as a whole |
| microeconomics |
the study of individuals behavior in the economy, of the components of the larger economy |
| ceteris paribus |
latin root
the assumption of nothing else changing |
| GDP stand for? |
Gross Domestic Product |
| Gross Domestic Product (GDP) |
the total market value of all final goods and services produced within a nation's borders in a given time period |
| per capita GDP |
the dollar value of GDP divided by total population; average GDP |
| 4 Major uses of Total Output (GDP) are? |
1. Consumption
2. Investment
3. Government Services
4. Net Exports |
| Consumer goods and services |
anything and everything households buy for their own use |
| Investment goods and services |
expenditures on (production of) new plant, equipment, and structures (capital) in a given time period, plus changes in business inventories |
| Government Services |
Income Transfers, Exports, Imports, Net Exports |
| Income Transfers |
payments to individuals for which no current goods or services are exchanged, such as SSI, welfare, unemployment benefits, etc. |
| Exports |
goods and services sold to foreign buyers |
| imports |
goods and services purchased from foreign sources |
| net exports |
the value of exports minus the value of imports |
| Comparative Advantage |
the ability of a country to produce a specific good at a lower opportunity cost than its trading partners |
| international trade allows countries to do what? |
it allow countries to produce and export what they do best and import goods they don't produce as efficiently. |
| Human Capital |
the knowledge and skills possessed by the workforce |
| capital stock/intensive |
production processes that use a high ratio of capital to labor inputs |
| productivity |
1.output per unit of input, such as output per labor-hour
2. the amount of output produced by the average worker |
| High Productivity |
1. Factor Mobility
2. Technological Advance
3. Outsourcing and Trade |
| Factor Mobility |
1. reallocating resources from one industry to another
2. on factory dies, while another open up |
| technological Advance |
an economy can produce more output with existing resources |
| outsourcing and trade |
global resources, given resources to other countries |
| Role of Government |
1. providing a legal framework
2. protecting the environment
3. protecting consumers
4. protecting labor |
| income quintile |
one- fifth of the population, rank-ordered by income |
| optimal mix of output |
the most desirable combination of output attainable with existing resources, technology, and social values |
| market mechanism |
the use of market prices and sales to signal desirable outputs (or resource allocations) |
| market failure |
an imperfection in the market mechanism that prevents optimal outcomes |
| causes of market failure |
1. public goods
2. externalities
3. market power
4. equity |
| public goods means |
a good or service whose consumption by one person does not exclude consumption by others |
| public goods consist of |
1. private goods
2. no exclusions
3. the free-rider dilemma
3. underproduction of Public goods |
| Private good |
a good or service whose consumption by one person excludes consumption by others |
| the free-rider dilemma (free rider) |
an individual who reaps direct benefits from someone else's purchase (consumption) of a public good |
| Externalities means |
1. costs (or benefits) of a market activity borne by a third party; the difference between the social and private costs (benefits) of a market activity
2. producing something that doesn't not benefit consumer |
| externalities consist of |
1. external costs
2. external benefits |
| external costs |
cost more to produce a good or service, but is not demand enough by consumers |
| external benefits |
the market produce less than what consumer demand for |
| Market Power |
the ability to alter the market price of a good or a service, such as monopoly |
| monopoly |
a firm that produces the entire market supply of a particular good or service |
| transfer payments |
payments to individuals for which no current goods or services are exchanged, like SSI, welfare, and unemployment benefits |
| taxes and transfers system |
take taxes from ppl who has "too much" and give it to the ppl with "too little" |
| merit goods |
everyone is entitled to some minimal quantity of food or services |
| unemployment |
the inability of labor-force participants go find jobs |
| inflation |
an increase in the average level of prices of goods and services |
| Macro Instability |
unemployment and inflation |
| federal growth |
1. direct expenditure
2. income transfers |
| what's the primary function of taxes? |
it's to transfer command over resources (purchasing power) from the private sector to the public sector |
| Federal Taxes/Revenues |
1. income taxes
2. social security taxes
3. corporate taxes
4. excise taxes |
| income taxes consist of? |
progressive tax |
| progressive tax |
a tax system in which tax rates rises as income rises
the richer you are the more you pay |
| social security taxes consist of? |
1. proportional tax
2. regressive trax |
| proportional tax |
a tax that levies the same rate on every dollar of income |
| regressive tax |
a tax system in which tax rates fall as incomes rises
the richer you are the less you pay tax, and vise versa |
| corporate taxes |
taxes coporate's porfit |
| excise taxes |
sales taxes imposed on specific goods and services |
| state and local revenues comes from? |
taxes |
| government failure |
government intervention that fails to improve economic outcomes |
| the issue of government waste encompasses what two distinct questions? |
1. efficiency
-are we getting as much services as we could from the resources we allocate to govt?
2. opportunity cost
-are we giving up too many private-sector goods in order to get those services? |
| cost-benefit analysis |
additional public-sector activity is desirable only if the benefits from that activity exceed its opportunity costs |
| valuation problems |
the value (benefits)of public services must be estimated because they don't have (reliable) market prices |
| Ballot Box Economics |
voting mechanism substitute for the market mechanism in allocating resources to the public sector and deciding how to use them |
| public-choice theory |
theory of public sector behavior emphasizing rational self-interest of decision makers and voters |
| flat tax |
everyone gets the same amount of tax you have to pay no matter how much your income is |
| 3 Theory of how Economy Works |
1. Classical Theory
2. Keynesian
3. Monetarist |
| Monetarist |
1. the driving force of the economy is money
2. the more money circulating in the economy, we can control the economy, with limits
|
| Keynesian |
1. side w/demand
2. business is nt the drivin force of the economy, instead it is consumer
3. businesses are opperated because of the demand for the good
4. tax cut for consumer is more beneficial for economy downfall then it is for a business tax cut |
| Classical Theory |
1. side w/supply
2. The business drives the economy
3. No one gets a pay-check w/o producers
4.the pay check drives the market to cycle
5. Market is suppose to fix itself
6. give businesses a tax cut when economy is slow
|
Science Vocab 147928
