Transcript Economics Semester Review!

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