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Honors Economics
Macroeconomics/Microeconomics
45
Economics
Undergraduate 1
05/05/2010

Additional Economics Flashcards

 


 

Cards

Term
Foreign Exchange Market
Definition
various national currencies are exchanged
Term

Flexible Exchange System

Definition
supply and demand
Term

Fixed Exchange System

Definition
government
Term
What determines exchange rates?
Definition

·         Relative income

·         Changes in tastes

·         Relative price level

·         Relative interest rates

Term

Trade Protections and Subsidies (Examples)

Definition

·         Taxes – Tariffs

·         Import quotas

·         Nontariff barriers (licensing)

·         Export subsidies

Term

 World Trade Organization (153 nations)

Definition
WTO
Term

General agreement on tariff and trade (23 nations)

 

Definition

GATT

Term

Full Employment

Definition
Unemployment rate less than 5%, all resources are being used to the fullest potential.
Term

Scarce Resources

Definition

·         Labor

·         Land

·         Capital

·         Entrepreneurial ability

Term
Private Goods
Definition
Term
 Public goods
Definition
Term

Marginal Cost equals Marginal Benefit

Definition
Term

What causes economic growth?

 

Definition

·         new technology

·         better education

·         more resources

Term
Socialism
Definition
Another name for the command system.
Term
Another name for the market system.
Definition
Capitalism
Term

Freedom of Enterprise

Definition

·         sell wherever and whenever one likes

·         using or obtaining the economy

Term
Marginal=
Definition
One extra
Term
Marginal cost=
Definition
Marginal benefit
Term
Causes of economic growth:
Definition
• new technology
• better education
• more resources
Term
Freedom of enterprise:
Definition
• sell wherever and whenever one likes
• using or obtaining the economy
Term
Freedom of choice:
Definition
• buy or sell property
• workers can start/stop
• consumers can choose
Term
Law of demand:
Definition
If the price increases, the demand will decrease
Term
Changes in demand are caused by:
Definition
• Economic situation (income)
• Number of buyers
• Tastes
• Prices
Term
Law of supply:
Definition
Price increases, the supply increases because the supply is making more of a profit and they want to produce more.
Term
Market Failure:
Definition
The inability of a market to produce the right amount.
Term
Negative spill over cost:
Definition
Pollution
Term
Positive spill over cost:
Definition
Education
Term
TP:
Definition
Total Product
Term
MP:
Definition
Marginal Product = change in total product (TP) / change in resources
Term
Law of diminishing returns:
Definition
Extra resources put in will finally result in MP declining.
Term
GDP:
Definition
Gross Domestic Product
• Excludes second hand sales and financial transactions
Term
What is the formula for calculating GDP?
Definition
GDP= C+ Ig + G + Xn
• C = Personal Consumption
• Ig = Gross Investment
• G = Government Purchase
• Xn = Export - Import
Term
Nominal GDP:
Definition
Unadjusted GDP, not compared to other years.
Term
Real GDP:
Definition
Adjusted GDP, compared to another year.
Term
Unemployment rate:
Definition
The percentage of the labor force unemployed
• Frictional unemployment
• Structural unemployment
• Cyclical unemployment
Term
Full employment:
Definition
4-5% unemployed (no cyclical)
Term
Inflation:
Definition
General price level is increasing
Term
CPI (measures inflation)
Definition
Consumer price index
Term
Functions of money:
Definition
• Unit of account
• Store value
• Medium of exchange
Term
Assets:
Definition
• Land
• Property
• Bonds
• Stock
Term
The Government backs the value of the $.
Definition
Term
The value of money is determined by:
Definition
• Acceptability
• Legal tender
• Relative scarcity
Term
What is the FED and what do they do?
Definition
Federal Reserve (The banks' bank)- Lend money to banks
- Supervises the banks
- Decides interest rates
- Controls money supply
- Issues currency
- Check collection
- Controls monetary policy
Term
Monetary Policy:
Definition
• Open market operations
• The reserve ratio
• The discount rate
• The auction facility
Term
Fiscal Policy:
Definition
• Government spending
• Taxes
• Combination
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