ECON. SEMESTER EXAM REVIEW
SCARCITY
OPPORTUNITY COST
CETERIS PARIBUS
FACTORS OF PRODUCTION & PRICETAGS
LAND - RENT
LABOR - WAGES
CAPITAL - INTEREST
ENTREPRENEURSHIP - PROFIT
TECHNOLOGY – RESEARCH & DEV.
PRODUCTION POSSIBILITES CURVE
POSITIVE
NORMATIVE
KEY ECONOMIC QUESTIONS:
WHAT TO MAKE
HOW & HOW MUCH
WHO
ECONOMIC SYSTEMS & EXAMPLES
TRADITIONAL
COMMAND
MARKET
MIXED
CAPITALISM
SOCIALISM
COMMUNISM
FREE MARKET/FREE ENTERPRISE
LAISSEZ-FAIRE
ADAM SMITH – THE WEALTH OF NATIONS
“INVISIBLE HAND” OF THE MARKETPLACE
COMPETITION
BASIC ASSUMPTIONS: PEOPLE ARE…
RATIONAL
SELF-INTERESTED
COST-BENEFIT ANALYSIS
UTILITY
SUNK COST
LAW OF DIMINISHING MARGINAL UTILITY
PRODUCTION
PRODUCTIVITY
ECONOMIC GROWTH
STANDARD OF LIVING
SCHUMPETER’S GALE OF CREATIVE DESTRUCTION:
PROGRESS
LAW OF DEMAND
LAW OF SUPPLY
SUBSTITUTES
COMPLEMENTS
THE PRICE EFFECT (SHIFT ALONG A CURVE)
THE SUBSTITUTION EFFECT
THE INCOME EFFECT
SHIFTS IN THE CURVE
TRIBE: DETERMINANTS OF DEMAND
ROTTEN: DETERMINANTS OF SUPPLY
NORMAL GOODS
INFERIOR GOODS
ELASTICITY
INELASTICITY
SURPLUS
SHORTAGE
PRICE CEILING
PRICE FLOOR
MINIMUM WAGE – PRICE FLOOR
MARKET FAILURES
EXTERNALITY
POSITIVE
NEGATIVE
TRAGEDY OF THE COMMONS
BARTER – DOUBLE COINCIDENCE OF WANTS
MONEY
MEDIUM OF EXCHANGE
UNIT OF ACCOUNT
STORE OF VALUE
ACCEPTABILITY
DIVISIBILITY
DURABILITY
PORTABILITY
SCARCITY
FIAT MONEY
COMMODITY MONEY
LIQUIDITY
SURRENCY
DEMAND DEPOSITS
ASSET
LIABILITY
CIRCULAR FLOW MODEL
FACTOR MARKET
PRODUCT MARKET
GDP = C + I + G + X
COUNTED
NOT-COUNTED
TRANSFER PAYMENTS
INJECTION
LEAKAGE
LABOR FORCE
UNEMPLOYMENT
FRICTIONAL
SEASONAL
STRUCTURAL
CYCLICAL
BUSINESS CYCLE
RECESSION / DEPRESSION
NATURAL RATE OF UNEMPLOYMENT
FULL EMPLOYMENT
FRACTIONAL RESERVE BANKING
RESERVE REQUIREMENT
MONEY MULTIPLIER
INFLATION
DEMAND-PULL INFLATION
COST-PUSH INFLATION
DEFLATION
DISINFLATION
STAGFLATION
JOHN KAYNARD KEYNES
FISCAL POLICY – TAX & SPEND
EXPANSIONARY
CONTRACTIONARY
SEC. OF THE TREASURY: TIMOTHY GEITHNER
DEFICIT
DEBT
DISCRETIONARY FISCAL POLICY
AUTOMATIC STABILIZER
UNEMPLOYMENT INSURANCE
THE FEDERAL RESERVE
12 DISTRICTS
7 ON THE BOARD OF GOVERNORS
14 YR. TERMS
CHAIRMAN OF THE FED: BEN BERNANKE
THE MONEY SUPPLY
MONETARY POLICY
RESERVE REQUIREMENT
INTEREST RATE
--DISCOUNT RATE
--FEDERAL FUNDS RATE
OPEN MARKET OPERATIONS (BUY/SELL BONDS)
REAL GDP V. NOMINAL GDP
EQUATION OF EXCHANGE: MV=PQ
CROWDING OUT
CONSUMER PRICE INDEX (CPI)
TAXES
PROGRESSIVE
PROPORTIONAL / FLAT
REGRESSIVE
U.S. GOVERNMENT REVENUE: INCOME TAX
STATE GOV’T REVENUE: PROPERTY & SALES TAX
SALES TAX - REGRESSIVE