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FINAL EXAM
Glencoe - Principles & Practices Text
240
Economics
12th Grade
03/14/2008

Additional Economics Flashcards

 


 

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Term
Scarcity
Definition
one of the basic economic problems - arises because society does not have enough resources to produce all things people would like to have.
Term
TINSTAAFL
Definition
There is no such thing as a free lunch - even if you get something for free it cost someone somewhere - to produce it, or in increased prices to cover the freebe...
Term
3 basic economic questions every society must face:
Definition
WHAT to produce, HOW to produce and for WHOM to produce
Term
What are the 4 factors of production required to produce the things that people use?
Definition
Land, Labor, Capital and Entrepreneurs
Term
Capital
Definition
The tools, equipment and factories used to produce goods and services.
Term
Want vs Need
Definition
NEED - basic requirement for survival (food, clothing, shelter) WANT - way of expressing a need ( to satify a NEED for food, a person may WANT pizza)
Term
Gross Domestic Product
Definition
most comprehensive measure of a country's total output - key measure of country's economic health - calculated by adding the dollar value of all final goods and services produced within a country's border in a year
Term
4 key elements of economics
Definition
Description, analysis, explanation, prediction
Term
Define what an economic product is.
Definition
goods and services that are relatively scarce, useful, and transferrable to others.
Term
Comsumer good (vs. capital good)
Definition
A consumer good is intended for final use by individuals whereas a capital good is a manufactured good used to produce other goods and services (ex. and oven in a bakery - what is the oven? What is the cake?
Term
goods and SERVICES
Definition
a good is something tangable (can be touched) whereas a service is intangable - work that is performed for someone such as seeing a doctor, or getting a haircut.
Term
Consumer
Definition
person who uses goods and services to satisfy wants and needs
Term
value
Definition
worth that can be measured in dollars and cents - must be scarce and have utility
Term
paradox of value
Definition
explains how some necessities, such as water, have little monetary value whereas some non-necessities, such as diamonds, have a much higher value. Water is in plentiful supply in most places and diamonds are much more rare.
Term
utility
Definition
the capacity to be useful and provide satisfaction - varies for different people. think of water and diamonds
Term
wealth
Definition
accumulation of of those products that are tangible, scarce, useful, and transferable. doesn't include services because they are intangible.
Term
Market
Definition
Location or other mechanism (internet) that allows buyers and sellers to exchange economic products
Term
factor markets
Definition
where productive resources are bought and sold - where people sell thier labor for wages, pay rent, borrow money...
Term
Product Market
Definition
where producers sell thier goods and services to consumers
Term
Circular Flow of Economic Activity
Definition
Where Money received by individuals from businesses in the factor market, returns to businesses in the product markets, and businesses use this money to produce more goods and services...
Term
When does economic growth occur?
Definition
when a nations total output of goods and services increases over time causing the circular flow to get bigger, mainly due to increased productivity
Term
Productivity
Definition
a measure of the amount of output produced by a given amount of inputs in a specific period of time
Term
sole propriotorship
Definition
a business owned by one person - unlimited liability
Term
partnership
Definition
a business owned by two or more person - unlimited liability
Term
Division of Labor
Definition
when work is arranges so that individual workers do fewer tasks than before and results in increased productivity - ex: assembly line
Term
specialization
Definition
when factors of production perform tasks they can do relatively more efficiently than others.
Term
human capital
Definition
sum of the skills, abilities, health and motivation of a people
Term
Demand
Definition
the desire, ability and willingness to buy a product
Term
Supply
Definition
amount of a product that would be offered for sale at all possible prices that could prevail in the market
Term
Law of Supply
Definition
the principle that suppliers will normally offer more for sale at high prices and less at lower prices
Term
Supply curve
Definition
a graph showing the various quantities supplied at each and every price that might prevail in the market.
Term
Microeconomics
Definition
the area of economics that deasl with behavior and decision making by small units, such as individual firms.
Term
Market supply
Definition
the supply curve that shows the quantities offered at various prices by all firms that offer the prduct for sale in a given market
Term
sin tax
Definition
a relatively high tax designed to raise revenue and reduce consumption of a socially undesireable product
Term
economic interdependance
Definition
to rely on others and have other rely on us to provide the goods and services that we consume - events in one part of the country or even world can have a dramtic impact elsewhere - dpression in US affects rest of world...
Term
quantity supplied
Definition
the amount that producers bring to market at any given price
Term
demand schedule
Definition
a lsiting that shows various quanitities demanded of a particular product at all prices
Term
change in quantity supplied
Definition
the change in amount offered for sale in response to a change in price
Term
Change in Supply
Definition
a situation where suppliers offer different amounts of products for sale at all possible prices in the market
Term
demand curve
Definition
the graph that shows the quanitity demanded at each and every price that might prevail int he market
Term
Subsidy
Definition
government payment to an individual, business, or other group to encourage or protect a certain type of economic activity
Term
incidence of a tax
Definition
Or the final berdon of a tax can be predicted with the help of supply and demand analysis.
Term
Supply elasticity
Definition
a measure of the way in which quantity supplied responds to a change in price
Term
Theory of production
Definition
relationship between the factors of production and the output of goods and services
Term
Law of Demand
Definition
the quantity demanded for goods or service varies inversely with its price . if the price goes up, quantity of demand goes down.
Term
Short run
Definition
period of production that allows producers to change only the amount of the variable input called labor
Term
Long run
Definition
a period of production long enough for producers to adjust the quantities of all their resources, including capital
Term
market demand curve
Definition
the demand curve thats shows the quantities demanded by everyone who is interested in purchasing the product
Term
Law of Variable Proportions
Definition
in the short run, output will change as one input is varied while the others are held constant
Term
Limited Life
Definition

That the firm legally ceases to exist when the owner dies, quits, or sells the business.

Term
tax loopholes
Definition
exceptions or oversights in the tax law that allow some people and businesses to avoid paying taxes.
Term
Partnership
Definition
Is a business jointly owned by two or more persons.
Term
Marginal utility
Definition
the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product
Term
production function
Definition
a concept that describes the relationship between changes in output to different amounts of a single input while other inputs are held constant
Term
Marginal utility
Definition
the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product
Term
individual income tax
Definition
the tax on peoples earnings
Term
raw materials
Definition
unprocessed natural products used in production
Term
marginal product
Definition
extra output or change in total product caused by the addition of one more unit of variable input
Term
diminishing marginal utility
Definition
principle which states that the extra satisfaction we get from using additional quanitites of the product begins to diminish
Term
sales tax
Definition
a general tax levied on most consumer purchases
Term
Stages of Production
Definition
increasing returns, diminishing returns, and negative returns
Term
Diminishing Returns
Definition
the stage where output increases at a diminishing rate as more units of a variable input are added
Term
change in quanity demanded
Definition
a movement along the demand curve that shows a change in quantity of the product purchased in response to a change in price
Term
Fixed Cost
Definition
the cost that a business incur even if the plant is idle and output is zero
Term
income effect
Definition
the change in quanity demanded because of a change in price that alters consumer' real income
Term
Overhead
Definition
remains the same
Term
Variable cost
Definition
a cost that changes when the business rate of operation or output changes
Term
benefit principle of taxation
Definition
those who benefit from government goods and services should pay in proportion to the amount of benefits they receive.
Term
substitution effect
Definition
the change in quantity demanded because of the change in the relative price of the product
Term
Total Cost
Definition
is the sum of the fixed and variable costs
Term
Marginal Cost
Definition
extra cost incurred when a business produces one additional unit of a product.
Term
E-commerce
Definition
electronic business or exchange conducted over the Internet
Term
Total Revenue
Definition
number of units sold multiplied by the average price per unit
Term
Marginal Revenue
Definition
the extra revenue associated with the production and sale of one additional unit of output
Term
change in demand
Definition
a shift on the demand durve
Term
Marginal Analysis
Definition
type of cost-benefit to the extra costs of an action
Term
substitues
Definition
products used to replace other products
Term
Break-even point
Definition
total output or total product the business needs to sell in order to cover its total costs
Term
Profit-maximizing quantity of output
Definition
reached when marginal cost and marginal revenue are equal
Term
ability-to-pay principle of taxation
Definition
the belief that people should be taxed according to their ability to pay, regardless of the benefits they recieve.
Term
elasticity
Definition
a measure of responsiveness that tells us how a dependent variable such as quanitity responds to a change in an independent variable such as price.
Term
Price
Definition
the monetary value of a product as established by supply and demand
Term
proportional tax
Definition
imposes the same percentage rate of taxation on everyone, regardless of income.
Term
demand elasticity
Definition
the extent to which a change in price causes a change in the quantity demanded
Term
Rationing
Definition
system under which an agency such as government decides everyone's "fair" share
Term
ration coupon
Definition
a ticket or a recepit that entitles the holder to obtain a certain amount of a product
Term
Rebate
Definition
a partial refund of the original price of the product
Term
elastic
Definition
a given change in price causes a relatively larger change in quantity demanded
Term
average tax rate
Definition
total taxable income divided by the total income
Term
Economic model
Definition
a set of assumptions that can be listed in a table
Term
inelastic
Definition
a given change in price causes a relatively smaller change in quantity demanded
Term
Market equilibrium
Definition
a situation in which prices are relatively stable, and the quantity of goods or services supplied is equal to the quantity demanded.
Term
unit elastic
Definition
a given change in price causes a proportional change in quantity demanded
Term
Surplus
Definition
a situation in which the quantity supplied is greater than the quantity demanded at a given price
Term
progressive tax
Definition
a tax that imposes a higher percentage rate of taxation on persons with higher incomes.
Term
shortage
Definition
situation in which the quantity demanded is greater than the quantity supplied at a given price
Term
equilibrium price
Definition
price that "clears the market" by leaving neither a surplus nor a shortage at the end of the trading period
Term
price ceiling
Definition
a maximum legal price that can be charged for a product
Term
GDP
Definition
Gross Domestic Product-the dollar amount of all final goods and services produced within the country's national borders in a year
Term
marginal tax rate
Definition
the tax rate that applies to the next dollar of taxable income, that increases as the amount of taxable income increases.
Term
minimum wage
Definition
the lowest legal wage that can be paid to most workers
Term
price floor
Definition
lowest legal price that can be apid for a good or service
Term
target price
Definition
essentially a price floor for farm markets
Term
regressive tax
Definition
is a tax that imposes a higher percentage on low incomes than on high incomes.
Term
nonrecourse loan
Definition
loan that carries neither a penalty nor further obligation to repay if not paid back
Term
national income accounting
Definition
a system and accounts that keeps track of production, consumption, saving, and investment
Term
nonrecourse loan
Definition
loan that carries neither a penalty nor further obligation to repay if not paid back
Term
intermediate products
Definition
products used to make other productsalready counted in GDP
Term
secondhand sales
Definition
the sales of used goods
Term
Intergovernmental revenue
Definition
funds collected by one level of government that are distributed to another level of government for expenditures
Term
nonmarket transactions
Definition
transactions that don't take place in the market
Term
property tax
Definition
a tax on tangible and intangible possessions such as real estate, building,s furniture, automobiles, farm animals, stocks, bonds, and bank accounts
Term
tax assessor
Definition
the person who assigns value to property for tax purposes
Term
payroll withholding system
Definition
a system that requires an employer to automatically deduct income taxes from an employee's paycheck and send it directly to the government.
Term
underground economy
Definition
unreported legal and illgal activites like gambling, smuggling, drugs and counterfeiting
Term
payroll witholding statement
Definition
the summary statement attached to a paycheck that summarizes income, tax witholdings, and other deductions
Term
payroll witholding statement
Definition
the summary statement attached to a paycheck that summarizes income, tax witholdings, and other deductions
Term
accelerated depreciation
Definition
larger than normal depreciation charges which allowed firms to reduce federal income tax payments
Term
GNP
Definition
Gross National Product- the dollar value of all fuinal goods, services, and structures produced in one year with labor and property supplied by a country's residents.
Term
investment tax credit
Definition
a reduction in business taxes that are tied to investment in new plants and equipment
Term
Internal Revenue Service(IRS)
Definition
the branch of the U.S. treasury department in charge of collecting taxes.
Term
surcharge
Definition
additional tax above and beyond the base rate
Term
NNP
Definition
net national product-second measure of GNP. less depreciation
Term
alternative minimum tax
Definition
the personal income rate that applies whenever the amount of taxes paid falls below some designated level
Term
tax return
Definition
an annual report to the IRS summaqrizing total income.
Term
capital gains
Definition
profits from the sale of an asset held for 12 months
Term
NI
Definition
national income- third measure of GNP. the income that's left after all taxes except the coprorate profits tax are subtracted from NNP
Term
value-added tax
Definition
a tax placed on the value that manufacturers add at each stage of production
Term
PI
Definition
personal income-fourth measure of GNP.l the total amount of income going to consumers before individual income taxes are subtracted
Term
flat tax
Definition
a proportional tax on individual income after a specified threshold has been reached
Term
DI
Definition
disposable psersonal income- fifth and smallest measure of GNP. the total income the consumer sector has at its disposal after personal income taxes
Term
indexing
Definition
an upward revision of the tax brackets to keep workers from paying more in taxes because of inflation.
Term
household
Definition
all persons who occupy a house, apartment, or room that constitutes separate living quaters
Term
unrelated individual
Definition
a person who lives alone even though he or she may have family living elsewhere
Term
FICA
Definition
is the Federal Insurance Contributions Act tax levied on both employers and employees to pay for Social Sercurity and medicare.
Term
family
Definition
a group of two or more persons related by blood, marriage ro adoption who are living together in a household
Term
Medicare
Definition
a federal heath-care program available to all senior citizens, regardless of income.
Term
output-expenditure model
Definition
macroeconomic model used to show aggregate demand by the consumer, investment, government, and foreign sectors.
Term
net exports of goods and services
Definition
a term that refers to the difference between the US exports and its imports
Term
inflation
Definition
a rise in the general price level
Term
price index
Definition
a staticstical series that can be used to measure changes in prices over time
Term
census
Definition
an official count of all people, including their place of residence
Term
payroll taxes
Definition
s.s.tax and medicare are also called payroll taxes.
Term
base year
Definition
a year that serves as a basis of comparison for all other years
Term
urban population
Definition
people living in incorporated villages or towns with 2,500 or more inhabitants
Term
market basket
Definition
a representative selection of commonly purchased goods and services
Term
rural population
Definition
makes up the remainder of the total population, including those persons who live in sparsely populated areas along the fringes of cities
Term
center of population
Definition
the point where the country would balance if it could be alid flat and all the people weighed the same
Term
corporate income tax
Definition
the tax a corporation pays on its profits.
Term
CPI
Definition
consumer price index- reports on price changes for about 80,000 items in 364 categories
Term
demographers
Definition
people who study growth, density, and otehr characterisstics of population
Term
fertility rate
Definition
is the number of births that 1,00 women are expected to undergo in their lifetime
Term
life expectancy
Definition
the average remaining life span of people who reach a given age
Term
producer price index
Definition
measures price changes paid by domestic producers for their inputs
Term
net immigration
Definition
the net change in population caused by people moving into and out of the country
Term
excise tax
Definition
a tax on the manufacture or sale of selescted items such as gasoline and liquor- it is the fourth largest source of government revenue
Term
implicit GDP price deflator
Definition
an index of average levels of rpices for all goods and services in the economy
Term
baby boom
Definition
the high birth rate years from 1946 to 1964
Term
population pyramid
Definition
a type of bar graph that shows the breakdown of population by age and gender
Term
current GDP
Definition
when the GDP is not adjusted to remove the effects of inflation
Term
dependency ratio
Definition
a ratio based on the number of children and elderly for every 100 persons in the working-age bracket of 18 through 64.
Term
luxury goods
Definition
if the demand grows faster than income when income grows
Term
real GDP
Definition
or GDP in constant dollars. when the distortions of inflation have been removed
Term
real GDP per capita
Definition
thedollar amount5 of real GDP produced on a per person basis
Term
growth triangle
Definition
a table that shows annual compound rates of growth between selected periods of time
Term
standard of living
Definition
the quality of lifebased on the possession of necessities and luxuries that make life easier.
Term
renewable resource
Definition
resources that can be replenished for future use.
Term
gift tax
Definition
aq tax on donations of money or wealth and is paid by the person who makes the gift.
Term
capital to labor ratio
Definition
the total capital stock divided by the number of workers in the labor force
Term
labor productivity
Definition
the amount of ouput produced per unit of labor input
Term
customs duty
Definition
is a charge levied on goods brought in from other countries.
Term
user fees
Definition
charges levied for the use of a good or service
Term
business cycles
Definition
largely systematic ups and downs of real GDP
Term
business fluctuations
Definition
the rise and fall of real GDP over time in a nonsystematic manner
Term
recession
Definition
a period during which real GDP declines for two quarters in a row, or six consecutive months
Term
peak
Definition
the point where real GDP stops going up
Term
trough
Definition
the turnaround point where real GDP stops going down
Term
expansion
Definition
a period of recovery from a recession
Term
trend line
Definition
a path of steady growth
Term
depression
Definition
a state of the economy with large numbers of people out of work, acute shortages, and excess capacity in manufacturing plants
Term
depression scrip
Definition
currency issued by towns, chambers of commerce, and other civic bodies during the Great Depression of the 1930s
Term
econometric model
Definition
a macroeconomic model that uses algebraic equations to describe how the economy behaves
Term
index of leading indicators
Definition
a monthly statistical series that usually turns down before real GDP turns down, and turns up before real GDP turns up
Term
unemployed
Definition
people available for work who made a specific effort to find a job during the past month and who, during the most recent survey week, worked less than one hour for pay or profit
Term
unemployment rate
Definition
the number of unemployed individuals divided by the total number of persons in the civilian labor force
Term
frictional unemployment
Definition
unemployment caused by workers who are between jobs for one reason or another
Term
structural unemployment
Definition
unemployment that occurs when a fundamental change in the operations of the economy reduces the demand for workers and their skills
Term
cyclical unemployment
Definition
unemployment directly related to swings in the business cycle
Term
seasonal unemployment
Definition
unemployment resulting from changes in the weather or changes in the demand for certain products
Term
technological unemployment
Definition
unemployment caused when workers with less skills, talent, or education are replaced by machines and other equipment that do their jobs
Term
automation
Definition
production with mechanical ot other processes that reduce the need for workers
Term
price level
Definition
the relative magnitude of prices at one point in time
Term
deflation
Definition
a decrease in the general price level
Term
creeping inflation
Definition
inflation in the range of 1 to 3 percent per year
Term
galloping inflation
Definition
a more intense form of inflation that can go as high as 100 to 300 percent
Term
hyperinflation
Definition
inflation in the range of 500 percent a year and above
Term
Lorenz curve
Definition
a curve that shows how much the actual distribution of income varies from an equal distribution
Term
Poverty guidelines
Definition
annual dollar amounts used to evaluate the money income that families and unrelated individuals receive
Term
welfare
Definition
economis and social programs that provide regular assistance from the government or private agencies because of need
Term
Food stamps
Definition
government-issued coupons that can be redeemed for food
Term
Earned Income Tax Credit (EITC)
Definition
provides federal tax credits and sometimes cash to low-income workers
Term
enterprise zones
Definition
areas where companies can locate free of some local, state, and federal tax laws and other operating restrictions
Term
Workfare
Definition
a program that requires welfare recipients to exchange some of their labor for benefits
Term
negative income tax
Definition
a proposed type of tax that would make cash payments to certain groups below the poverty line
Term
Barter Economy
Definition
a moneyless economy that relies on trade
Term
Money
Definition
can be any substance that serves as a medium of exchange, a measure of value, and a store of value.
Term
Medium of exchange
Definition
something accepted by all parties as payment for goods and services.
Term
measure of value
Definition
a common denominator that can be used to express worth in terms that most individuals understand.
Term
Store of Value
Definition
the property that allows purchasing power to be saved until needed.
Term
Commodity Money
Definition
Money that has an alternative use as an economic good, or commodity.
Term
Fiat Money
Definition
Money by government decree such as the tiny, metallic coins used in Asia Minor in the seventh century B.C.
Term
Specie
Definition
money in the form of coins made from silver or gold.
Term
Monetart Unit
Definition

standard unit of currency in the U. S. money system.

Term
Monetary Standard
Definition
 the mechanism designed to keep the money supply portable, durable, divisible, and limited in supply helps with this task.
Term
State Banks
Definition
Banks that received their charter to operate from a state government.
Term
Legal Tender
Definition
fiat currency that must be accepted in payment for debts.
Term
National Banks
Definition
privately owned banks that received their operating charters from the federal government.
Term
National Bank notes or National currency
Definition

paper currency of uniform appearance that was backed by United States government bonds.

Term
Gold Certificates
Definition
paper currency backed by gold placed on deposit with the United States Treasury.
Term
Siler Certificates
Definition
Paper currency backed by silver dollars and bullion placed on reserve with the Treasury.
Term
Treasury coin notes
Definition
paper currency issued by the Treasury that was redeemable in both gold and silver.
Term
Gold Standard
Definition
a monetary standard under which the basic currency unit is equal to, and can be exchanged for, a specific amount of gold.
Term
Inconvertible fiat money standard
Definition
a monetary standard under which the fiat money supply cannot be converted into gold or silver by its citizens.
Term
Federal Reserve System
Definition
The Nations first true central bank.
Term

Central Bank

Definition

Is a bank that can lend to other banks in times of need.

Term
Federal Reserve notes
Definition
Paper currency issued by the Fed that eventually replaced all other types of federal currency were added to the money supply.
Term
Run on the bank
Definition
a rush by depositors to withdraw their funds from a bank before it failed.
Term
Bank Holiday
Definition
a brief period during which every bank in the country was required to close.
Term
Commercial Banks
Definition
banks that catered to the interests of business and commerce.
Term
Demand Deposit Accounts (DDAs)
Definition
accounts whose funds could be removed by simply writing a check without prior approval from the depository institution.
Term
Thrift Institutions
Definition

accepted the deposits of small investors but did not have DDAs until the mid- 1970s.

Term
Mutual Savings Bank (MSB)
Definition
a depositor-owned financial organization operated only for the benefit of its depositors.
Term
Savings Banks
Definition
became no longer mutually owned by depositors.
Term
Now accounts
Definition
a type of checking account that pays interest.
Term
Savings and Loan Association (S&L)
Definition
a depository institution that invests the majority of its funds in home mortgages.
Term
Credit Union
Definition
A nonprofit service cooperative that is owned by, and operated for, the benefit of its members.
Term
Share Draft Accounts
Definition
interest earning checking accounts, to compete with NOW accounts.
Term
Deregulation
Definition
The removal or relaxation of government restrictions on business.
Term
Creditor
Definition
A person or institution to whom money is owed and sue the bank's owners to recover the rest.
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