Economics Midterm Word Scramble
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| Question | Answer |
| Economics | How societies organize themselves to provide for their material well-being. |
| Resources | -Natural Resources (Land) -Human Resources (Labor) -Reproducible Inputs (Capital) |
| Commodity | Anything produced for sale in a market |
| Production | The action of making or manufacturing from components or raw materials, or the process of being so manufactured. |
| Economic Problem | -What to Produce? -How to Produce it? -How to distribute what is produced? |
| Institution | Social rules and codes of behavior that determine: -Who does what? (Division of Labor) -Who gets what? (Distribution of Social Product) |
| Reciprocity | Mutual Gift Giving (strengthens social bonds, imposes obligation to give something back, etc.) |
| Surplus | Production above and beyond what it takes to reproduce the society, including labor and inputs used up in production. |
| Technology | Relationship between inputs and outputs. |
| Investment | Using the surplus to increase the size of the inputs. |
| Economic Growth | The higher output resulting from more inputs. |
| Profits | The surplus itself. |
| Command Society | -Political institutions determine production and distribution. -Command can be an effective way of marshaling resources. |
| Capitalism (or Market) Economy | -Market organizes production and distribution because it has no central organization. -Appears to be just millions and billions of independent decisions concerning buying and selling. |
| Embedded vs. Disembedded | -Traditional societies' economies are embedded in cultural institutions. -Command societies' economies are embedded in political institutions. -In Market societies, a distinctly economic institution governs production and distribution. |
| Mixed Systems | There are no 'pure' systems of any type - tradition, command, or market. |
| Examples of Command in Modern Society | -Government Production and Distribution -All taxation and redistribution (Social Security, etc.) |
| Examples of Tradition in Modern Society | Tipping, holiday gift-giving, bonuses, DIY, etc. |
| Name the 4 Sectors | -Government -Household -Firm -Foreign (rest of the world) |
| GDP | Gross Domestic Product - The market value of all final goods and services produced in a nation during a period of time (usually measured yearly or quarterly). |
| Three Ways to Calculate GDP | Production, Spending, and Income. |
| What does 'C' stand for? | Consumption |
| What does 'I' stand for? | Investment |
| What does 'G' stand for? | Government Spending |
| What does 'X' stand for? | Exports |
| What does 'M' stand for? | Imports |
| What does it mean when X > M? | Trade Surplus --> Higher GDP |
| What does it mean when M > X? | Trade Deficit |
| What does it mean when X-M? | Trade Balance |
| What components, when added together, make up GDP? | GDP=C+I+G+(X-M) |
| Nominal GDP | Based on current market prices. |
| What are the mathematical components of Nominal GDP? | GDPn = PY (Price x Goods) |
| Real GDP (Y) | a measure of GDP that seeks to reflect the actual value of goods and services produced, by removing the effect of changes in prices. |
| Base Year | The year whose prices are chosen for evaluating production in all years. Real and nominal GDP are equal in the base year. |
| Calculate Real GDP | Real GDP = (Nominal GDP รท Price Index) x 100 |
| Disposable Income (Yd) | Yd = Y - T (Income - Tax Obligation) |
| Savings (S) | S=Yd - C |
| GDP Equation Derivation | (S - I) = (G - T) + (X - M) |
| Deficit Issue | Exporter gets dollars --> Exporter converts dollars into their own currency --> Bank gives dollars to Central Bank --> Central Bank buys US Treasury Bonds with obtained dollars. |
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