Economics

what are some elements of command and tradition in the US economy

fed state and local government, national defense, elementary school teachers usually female, children will typically follow in parents foot steps

what are three broad categories of unemployment

frictional, structural, and cyclical

who owns resources in a command economy

government central planning unit

inflation

a hurt economy

2 roles of banks in the economy

accept deposits make loans

characteristics of money

acceptable durable divisible relatively scarce portable

what is a market

anywhere consumers and producers meet to buy and sell goods services and resources

four broad categories of productive resources

capital(interest), human(salary), natural(rent), entrepreneurial ability(profit)

what is the federal reserves mission

conduct monetary policy

constraint

constraint on our ability to attain our goals example: time

how are inflation and deflation measured

consumer price index

what is a market system(price)

consumers and producers that meet anywhere to buy and sell goods services and resources

federal reserve system

controls how much banks can lend so there is a stable store of value acts as the nations central bank helps us meet economic goals

tool students can use to implement PACED model

decision making grid

command system

decisions made by central planning unit

deflation

decrease in overall level of prices

PACED decision making model

defines problem, lists alternatives, states criteria, evaluates alternatives, makes decision

what is a barter?

direct trade of goods services and resources

what is coincidence of wants

divisibility when both traders meet need of another

what is full employment

economy available resources are fully utilized

what are the tools of the fed to combat recession?

fed offers higher price which can effect lowering interest rates people better off selling securities to fed at higher price than they paid=extractionary policy

why is the us economy mixed but primarily market

has traditional elements but more market bc goods services and resources are sold in market place, changing prices, and coordinates transactions with consumer and producer

what determines the type of economic system a society has?

how a society answers the 3 basic economic ?s (what and how much g/s to prod. how to produce, for whom)

what is the money supply

how we measure the amount of money in an economy: money supply(M1) coins bills checks and travelers checks

what is price stability

increase in average price level of g/s = no inflation

what are income payments earned for providing resources in resource markets

interest or divid end

economic growth

long run economic goal concerned about the future health of the economy (urban congestion, pollution, rapidly depleted natural resources)

what is commodity money

medium of exchange money is an actual product that i generally acceptable bc of its intrinsic value

what are the functions of money

medium of exchange, standard of value, store value

fiat money

money declared by a government as valid exchange purposes fiat= standard of value

there is no such thing as a free lunch TINSTAAFL

opportunity cost / real cost

circular flow model

overview of the g/s and resources in market place businesses-producers households-individuals

what are productive resources

provide means for satisfying wants

what is a discouraged worker?

quit looking for job

what social goals are most likely to be emphasized in a command economy

security stability and equity

what are intermediate goods

type of capital resource, goods that have been produced and then used up in production of another good.

2 things that happen when an economy produces below pp frontier

unemployment and inefficient resources

opportunity cost/real cost/ trade off

value of highest foregone alternatives

what are the basic questions every society must ask?

what and how much goods and services to produce? how will goods and services be produced? for whom will they be produced?

? you ask when completing the decision making model?

what is the opportunity cost?

how the federal reserve is organized

3 parts board of governors, 12 district banks, and the FOMC (federal open market committee)

what percent of US economic activity takes place in market

70%

chairman of the fed

Ben Bernanke

what are the tools of the fed to combat inflation?

sell securities so they increase inerest rates that financial institutions and businesses would receive to attract higher bids for the securities=contractionary policy

how does the federal government provide economic security

social welfare programs social security unemployment compensation farm loans and food stamps

what are the broad social goals?

stability, growth, freedom, tariff, security, equity, efficiency

criteria

standards upon which a decision is based-goals you hope to achieve

what is an underemployed worker

takes a job under education level

3 ways economy can produce beyond production possibilities frontier

technology, capital investment, increase resources (new discoveries, population growth)

alternatives

the choices available to decision maker

what is scarcity

the reason why we must answer the three basic economic questions (what and how much g/s to produce, how will they be produced, and for whom will they be produced) occurs when wants are greater than resources available.

economic system

the way society organizes the production distribution of goods and services

what is the federal reserves responsibilities

to control the amount of money in economy by supervising money and banking system