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eco final
| Term | Definition |
|---|---|
| What does PPC illustrate? | a graph thatis used to produce other goods and services |
| capital goods | any human-made resource that is used to produce other goods and services |
| opprotunity cost | the most desirable alternative given up as a result of a decision |
| CFM | shows the interactions between households and buisnesses in the free market |
| goods | physical objects |
| services | actions |
| laissez faire | the doctrine that the government generally should not intervene with the market place |
| mixed economy | market based economic system in which the government plays a imited role |
| 3 ideas of adam smith | wealth of nations, laissez faire, and invisible hand/self interest |
| major fundamental problem of all economic systems | scarcity |
| factors of production | land, labor, capital, and entreprenuership |
| entreprenuer | ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services |
| why we study economics | to see how people seek to satisfy thier needs and wants by the choices they make |
| characteristics of pure capitalism | private property, freedom of enterprise, self interest as dominant motive, competition, reliance on price, limited role of government |
| communism | central planned economy, all power in the hands of the government |
| traditional economy | relies on habit, custom, or ritual to decide questions of production and consumption of goods or services |
| microeconomics | the study of the economic behavior and decision making of small units, such as individuals, families, and buisnesses |
| supply | the amount of goods available |
| law of demand | consumers buy more of a good when its price decreases and less when the price increases |
| law of supply | tendency of suppliers to offer more of a good at higher price |
| inelastic demand | not very sensitive to change in price |
| equilibrium | the point at which quantity demanded and quantity supplied is equal |
| shortage | situation in which quantity demanded is greater than quntity supplied |
| surplus | quantity supplied is greater than quantity demanded |
| substitutes | goods used in place of eachother |
| complements | 2 goods that are bought and used together |
| demand | desire to own something and the ability to pay for it |
| SEC | an independent agency of the government that regulates financial markets and investment companies |
| bear market | steady drop in stock markeet over a period of time |
| bull market | steady rise in stock market over a period of time |
| corporation | a legal entity owned by individual stock holders |
| assets | money and other valuables belonging to an individual or buisness |
| liability | legally bound obligation to pay debts |
| NASDAQ | american market for OTC securities |
| bond | a formal contract to repay borrowed money with interst at fixed levels |
| secondary market | market for reselling financial assets |
| primary market | market for selling financial assets that can only be redeemed by the original holder |
| dividend | portion of corporate profits paid out to stockholders |
| the dow | index that shows how certian stocks have traded |
| variable cost | a cost that rises or falls depending on how much of a good is produced |
| fixed cost | a cost that doesnt change, no matter how much of a good is produced |
| productivity | value of output produced |
| collusion | an agreement among firms to divide the market, set prices, or limit production |
| differentiation | making a product different from other similar products |
| regressive tax | a tax for which the percentage of income paid in taxes decreases as income increases |
| FICA | taxes that fund social security and medicare |
| proportional tax | a tax for which the percentage of income paid in taxes remains the same for all income levels |
| inflation | a general increase in prices caused by too much money in the economy, demand for goods/services exceeds existing supplies, and when producers raise prices in order to meet increased costs |
| purchasing power | the ability to purchase goods and services |
| pure competition | large number of firms, identical products, no barriers to entry, and no ocntrol over prices |
| monopolistic competion | many firms, similar but not identical products, low barriers to entry, some variety in goods, and little control over price |
| oligopoly | a few firms, high barriers to entry, some variety in goods, some control over prices |
| pure monopoly | only one firm, complete barriers to entry, no variety in goods, and complete control over prices |
| price war | when competitors cut prices very low to win buisness |
| natural monopoly | a market that runs most efficiantly when one large firm provides the output |
| advantages of sole proprietorship | easy to start up, relatively few regulations, sole reciever of profit, full control, easy to discontinue |
| disadvantages of sole proprietorship | unlimited personal liability, limited access to resources, lack of permanence |
| advantages of partnership | easy to start up, shared decision making, larger pool of capital |
| disadvantages of pertnership | unlimited liability and potential for conflict |
| advantages of a corporation | limited liability for owners, transferable ownership, ability to attract capital, long life |
| disadvantages of a corporation | expense and difficulty to start up, double taxation, potential loss of control by the founders, and more legal requirements and regulations |
| horizontal merger | the combination of 2 or more firms competing in the same market with the same good/service |
| vertical merger | the combonation of 2 or more firms involves in different stages of producing the same good/service |
| conglamerate | buisness combination merging more than 3 buisnesses that make unrelated products |
| causes in a change in demand | customer preference, prices of related goods, income, number of potential buyers, expectaions of price change |
| causes in a change in supply | natural disasters, input/resource cost, government, technology, number of suppliers, expectations |
| dimisnishing marginal utility | A law of economics stating that as a person increases consumption of a product - while keeping consumption of other products constant - there is a decline in the marginal utility that person derives from consuming each additional unit of that product. |
| tombstone | A written advertisement placed by investment bankers in a public offering of a security. It gives basic details about the issue and, in order of importance, the underwriting groups involved in the deal |
| who benefits from inflation | borrowers and producers |
| who hurts from inflation | lenders and savers |
| reserve ratio | The portion of depositors' balances banks must have on hand as cash. This is a requirement determined by the country's central bank, which in the U.S. is the Federal Reserve. The reserve ratio affects the money supply in a country |
| federal open market committee | The branch of the Federal Reserve Board that determines the direction of monetary policy |
| components of the federal reserve system | a.The Federal Reserve Banks b.The Board of Governors c.The Federal Open Market Committee |
| monetary policy | The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates |
| M1 | measures the most liquid components of the money supply, as it contains cash and assets that can quickly be converted to currency |
| M2 | A measure of money supply that includes cash and checking deposits as well as near money. “Near money" includes savings deposits, money market mutual funds and other time deposits, which are less liquid and not as suitable as exchange mediums |
| M3 | anything over $100,000 |
Created by:
hayhayspier