econ final

Identify the reason why the United States switched to a flexible exchange-rate system in the early 1970s.

when the gold standard was the prevailing to increase a country's commercial activity and make a country more wealthy and it required to be applied that a country's currency has to have a fixed exchange rate. At that time, the U.S wanted to increase its imports , then, the U.S.D started to be popular and accepted among countries the same as gold. Therefore, the U.S president declared the U.S would no longer redeem the U.S.D for gold

approaches to resolving deadlock that may occur between a union and a company's management.

Mediation: process of bringing in a neutral third person or persons to help settle a dispute Arbitration: process in which both sides agree to place their differences before a third party whose decision will be accepted as final

Identify the advantages and disadvantages of a flat tax.

+ simplicity to taxpayer + close most tax loopholes if it did away with most deductions and exemptions + reduces the need for tax accountants, tax preparers, and a large portion of the IRS - would remove many of the incentives built into the current tax code - no one knows exactly what rate is needed to replace revenues collected under the current tax system - no clear answer as to whether a flat tax would further stimulate economic growth Value -added tax

Identify the steps in South Korea's economic development by using a graphic organizer like the one below

- opening markets to world trade - after becoming skilled in export, production... - invest in heavy industry (ship-building, steel manufacturing) -major producer of electronics

Discuss why allocating resources without prices is difficult

-almost everyone feels his or her share is too small -The administrative cost of rationing -negative impact on the incentive to produce.

explain the difference between fixed and variable cost

-fixed: are the costs that an organization incurs even if there is little or no activity. -Variable costs: that change when the business's rate of operation or output changes.

describe the three stages of production

-increasing marginal returns -decreasing marginal returns -negative marginal returns

Identify three major price indexes

1 Consumer price index 2 Producer price index 3 GDP Deflator

Explain why sole proprietorships are attractive for entrepreneurs wanting to start a new business

1)ease of establishment 2)ease of management 3) owner keeps all profits 4)no separate taxes 5)psychological benefits 6)ease of getting out of business

Explain the three criteria used to evaluate taxes.

1. equity or fairness, meaning that taxes should be impartial. 2. simplicity, meaning that tax laws should be written so that both the taxpayer and the tax collector can understand them. 3. efficiency, meaning that the tax should be relatively easy to administer and reasonably successful at generating revenue.

Describe the effects of the Great Depression

1- A significant decrease in GDP ( GDP plunges dramatically during periods of depression) 2- the production also plummeted dramatically during periods of depression. 3- Depression also results in falling in banks. 4- Unemployment rate is rapidly increased during depression times. 5- Countries tend to make debts during depression, therefore, it may result in increasing the external debt of the country. 6- the rate of poverty tends to soar dramatically during during periods of depression. 7- the prices of agriculture products dropped significantly during depression times.

Describe two corrective measures being taken to close the income gap between men and women workers.

1- Equal Pay Act of 1963 It was a labor law in the U.S that issued in 1963. It prohibited gender wage discrimination between men and women. It required men and women to get equal pay for equal work with the same responsibilities and duties at the same establishment. 2- Civil Rights Act of 1964. It was enacted in July 1964 in the U.S. It is a landmark in civil rights. In addition it prohibited racial discrimination in employment. It banned discrimination between people based on color, gender, race a, religion and national origin.

Describe the five major kinds of unemployment by using a graphic organizer like the one below.

1- Frictional unemployment: it is the temporary unemployment results from individuals who are changing jobs and waiting for a new job or individuals who are actively seeking work. example : a fresh graduate students who is searching for a job. 2- Structural unemployment: it is a longer lasting unemployment resulting from fundamental changes in the economy such as: government policy and competition, which results in mismatch between employees' qualification and job requirements. 3- Technological unemployment: It occurs when there is a technological development and refers to individuals who lose their jobs because their skills do not match the job requirements. 4- Cyclical unemployment: It occurs due to the changes in the business cycle. it increases when there is a decline in economic activity and vice versa. 5- Seasonal unemployment: It caused by seasonal changes. the demand of specific jobs changes according to the change in the season. examples: harvesting time and tourism

Why does the federal government attempt to preserve competition among business enterprises? What different methods does the government have available for this task?

1- To avoid causing market failure. 2- To avoid monopoly markets. 3- To guarantee that prices of the products are not above the competitive equilibrium. 4- To secure the welfare of consumers. available method 1- Anti-trust legislation to promote competition in markets and enhance trade. 2- Cease and desist order to limit unfair acts and illegal activities that hamper competition in markets. 3- Determine a competitive equilibrium for the prices of the products that they are not allowed to exceed. 4- Put a minimum standard for the quality of the products that they should meet.

Describe the stages of economic development.

1. Primitive Equilibrium. It is "primitive" in the sense that the society has no formal economic organization. 2. economic development is a period of transition. It involves breaking away from the primitive equilibrium that exists in a society and moving toward economic and cultural changes. 3. takeoff This stage is not reached until the barriers of primitive equilibrium have been overcome. 4. semi-development, During this stage, the makeup of the country's economy changes, national income grow faster than population 5. high development where efforts to obtain food, shelter, and clothing are more than successful.

Discuss the difficulty of using discretionary fiscal policy

1. the various lags that inevitably occur between recognizing that there is a problem and actually doing something about it. 2. the decline of discretionary fiscal policy is the gridlock that can occur when the political parties in Congress oppose each other's views on the budget. 3. ideology of people in power - economists and politicians.

Identify four ways inflation destabilizes the economy using a graphic organizer like the one below.

1: Value of dollar goes down 2: Good prices skyrocket 3: Production of goods increases or decreases 4: Wages don't increase so good become harder to buy

Describe the role of shortages and surpluses in competitive markets

A Market Surplus occurs when there is excess supply- that is quantity supplied is greater than quantity demanded. In this situation, some producers won't be able to sell all their goods. A Market Shortage occurs when there is excess demand- that is quantity demanded is greater than quantity supplied. In this situation, consumers won't be able to buy as much of a good as they would like.

Identify the cause and effect of scarcity

A condition is a result from a society with not enough resources to produce what all people want. effects we must make economic decisions regarding how to satisfy seemingly unlimited and competing wants through the careful use of relatively scarce resources.

Explain why a corporation might choose to become a conglomerate.

A corporation might choose to become a conglomerate as this will protect its overall sales and profits from isolated economic happenings.

Which of the following questions is studied in microeconomics?

A. Should I go to college or get a job after I graduate

Describe why adapting to change is important for an economic system

Adopting to change is important for an economic system because a change could stimulate economic growth. Adopting to change could also enhance economic activity. Adopting to a change could also cause the international trade to develop and promote the international relations with foreign countries. Therefore, this also could cause the GDP to increase. Moreover, a change could benefit the economic system and enhance economic development.

Explain the difference between the supply curve of a firm and the aggregate supply curve.

Aggregate supply curve hypothetical curve showing different levels of real GDP that would be produced at various price levels Supply curve of a firm is the real GDP or output produced at various levels of price by the firm solely.

Distinguish between excise taxes, estate and gift taxes, and customs duties

An excise tax is the tax placed on the manufacture and sale of certain items. Estate taxes are taxes the government levies on the transfer of property when a person dies. A gift tax is paid by the person who makes the gift.

Explain how the age composition of the future population might impact our economy

As the current population ages they will require more medical facilities, retirement homes and medicine. These things will need to be built, thus improving GDP. However as the population grows older, need for already constructed infrastructure that is used by children such as schools and playgrounds will decline.

Why a college degree can lead to higher wages

Because some companies use signaling theory in their paying structure. An employer is willing to pay a worker for superior knowledge and ability, such as a master's degree.

Describe the limitations of the benefit principle of taxation

Belief that taxes should be paid according to benefits received regardless of income

Explain why member banks borrow from the Fed.

Borrowing at the discount window is convenient because it is always available and the lending process includes no negotiation or extensive documentation.

Identify and then describe the determinants of demand elasticity.

Can the Purchase be Delayed? Are Adequate Substitutes Available? Does the Purchase Use a Large Portion of Income?

Describe how a business obtains, and then disposes of, its cash flow.

Cash flow is obtained by adding net income to non-cash charges. A firm may pay this sum back to the owners or reinvest in itself.

Identify the source of income for the four sectors of the economy

Consumer - Personal disposable income. Investment - Retained earnings. Government - indirect business taxes, corporate income taxes, Social Security contributions, and individual income taxes. Foreign - No specified source of income but is instead represented by the difference in goods sent abroad and goods purchased from abroad.

Describe how consumers have influenced the success of products in recent years.

Consumers have influenced the success of products in recent years by their evolving wants, for example, the success of video games and internet search engines like Google, and purchasing more computers than TVs.

Identify the components of GDP by decoding the formula GDP = C + I + G + (X - M)

Consumption Investment gov purchases foreign sector (Net exports)

Identify the importance of cost-benefit analysis.

Cost benefit analysis is important because it encourages a way of thinking from each possible. Cost benefit analysis provides a comparison between the benefits and detriments of a certain action and take the right decision based on this comparison.

Describe how monetarists determine the proper growth rate for the money supply

Describe how monetarists determine the proper growth rate for the money supply.

Explain what is meant by the term distribution of income.

Distribution of income is the measure of what amount of the national income is possessed by different income groupings. These are generally measured by quintiles, groups of 20%. For example, the lowest quintile in 2004 made 3.4% of national income, the second lowest made 8.7% of income. This means that the lowest 40% of earners in the US together made 12.1% of national income in 2004.

Identify the benefits of membership in the European Union

EU is a single market because there are no internal barriers regulating the flow of workers, financial capital, or goods and services

Identify the problems that existed with pre-Civil War currency

Each bank issued its own currency in different sizes, colors, and denominations as a result hundreds of different kinds of notes could be in circulation in any given city. Banks would sometimes print too many notes because they could print more whenever they wanted. Counterfeiting became a major problem because there were so many notes in circulation counterfeiters didn't even bother to copy notes, instead just making up new ones.

Discuss how econometric models describe the behavior of the economy.

Econometric models are the quotative application of statistical and mathematical models using data to develop theories in economics and forecast future economic behavior from historical data.

Describe the five major characteristics of free enterprise. Free Enterprise

Economic Freedom: the freedom for individuals to choose not only what to buy, but their occupation, their employer, and their job location, and for businesses to hire whoever they want, produce whatever they want, and charge whatever price they choose Voluntary Exchange: the act of buyers and sellers freely and willingly engaging in market transactions Private Property Rights: allow people to own and control their possessions as they wish Profit Motive: the incentive that encourages people and organizations to improve their material well-being, the desire for profit Competition: the struggle among sellers to attract consumers, which is possible because individual entrepreneurs have the freedom to produce whatever products they think will be most profitable

Describe how economists view the term cost.

Economists view the term cost as meaning opportunity cost, or the cost of the next-best alternative use of money, time, or resources.

Explain how enterprise zones benefit residents of run-down or depressed areas.

Enterprise zones hope to entice businesses to locate to depressed areas by offering the company leeway on taxes and other operational costs. This creates jobs in an area that needs them and allows for residents to save on the cost of transportation they would spend if they had to travel to a different area to work.

Explain why entrepreneurs are thought to have important roles in the economy

Entrepreneurs are the driving force of the free enterprise system because they organize and manage the three other factors of production, land, labor, and capital, and act as both the spark plug and the catalyst of the free enterprise economy. When an entrepreneur is successful, everybody benefits; workers, consumers, and the government are rewarded in addition to the entrepreneur. Additionally, when an entrepreneur is successful, other firms are attracted to the industry, which increases competition, leading to increased quality and lower costs of the products.

Discuss the relationship of the federal deficit to the federal debt

Federal deficit comes when public expenditure exceeds public revenue causing a deficit. This deficit is financed by borrowing from companies, or even countries causing a federal debt.

How do the different measures of output and income allow us to assess the economy of a nation?

GDP, measurement of total output, is often used as a marker of overall economic health and well being. GNP on the other hand measures total income, rather than outcome. Indicators such as NNP, NI, PI, and DPI are all specific measures of national income that can be used to measure growth in separate areas.

Explain what and how a reasonably competitive market is always moving toward equilibrium

Goods/services that are sought balance with those produced by sellers, and the equilibrium price or market clearing price will tend not to change unless demand or supply change.

List four legislative attempts to deal with the problem of federal budget deficits.

Gramm-Rudman-Hollings (set federal deficit targets for Congress & the president to meet over a six-year period-targets that resulted in a zero deficit), Budget Enforcement Act of 1990 (pay-as-you-go that new spending proposals/tax cuts must be offset by reductions elsewhere), Omnibus Budget Reconciliation Act of 1993 (featured a combination of spending reductions/tax increases that made the individual income tax more progressive), Balanced Budget Agreement of 1997 (featured rigid spending caps-legal limits on annual discretionary spending)

List two reasons why there is concern for the plight of developing countries.

Humanitarian Economic

State an example of how politics sometimes overrides economic policies

If the economists advocate something contrary to the politician pledged during campaigns then he or she might reject the economist's views and override them.

Identify which component of GDP Keynes labeled as the cause of instability

In Keynes's theory, spending by the investment sector was not only unstable but had a magnified effect on other spending. In this school, the consumer spending is the most stable.

Discuss the difference between a horizontal and a vertical merger.

In horizontal merger, two or more firms join forces which manufacture the same product while in the case of vertical merger, firms in different steps of marketing or manufacturing come together.

Explain why incentives exist that cause pollution and how they work

Incentives that cause pollution exist because to reduce the amount of pollution generated by firms and public utilities. Pollution incentives also force firms to pay external cost for pollutants they generate. In addition, they encourage firms to to exert more efforts to reduce emissions they generate.

Explain the difference between the income effect and the substitution effect.

Income effect is the change in consumption resulting from a change in real income. Substitution effect is the change in quantitive demand due to change in relative price of the product.

Identify the major reasons for inequality in the distribution of income.

Income equality is generally attributed to eight factors; - education -wealth - tax law changes - decline of unions - more service jobs - monopoly power - discrimination -changes in family structure

Describe how individuals and businesspeople benefit from economic freedom.

Individuals benefit from economic freedom because they can choose their own occupations, employers, and uses for their money. Businesspeople benefit from economic freedom because they can choose where and how they produce.

Explain how the circular flow of economic activity generates wealth in an economy.

Individuals spend money on products so the businesses can pay for resources and the individual gets income from the resources

Describe how American consumers and the automobile industry reacted to the oil price increases of the 1970s.

Industry The automobile industry brutally declined as a response to the oil price increases of 1970s . In addition, the reputation of american automobile industry was ruined. Furthermore. the exporting of automobiles increased. Moreover, Trade deficit occurred and the GDP declined. consumer The value and the purchasing power of the U.S dollar declined as a response to the oil price increases, Moreover the prices of products dramatically soared and American consumers were unable to purchase and enjoy the same amount of goods and services they used to do before. Therefore, the living standard of american consumers significantly decreased.

Describe how Latin American countries have approached the transition to capitalism

Latin American countries followed a path of economic development that combined socialism and isolationism. Chile, however, took major steps to foster the growth of capitalism when it privatized airlines, telephone services, and utilities. The country even used the billions deposited in its pension funds to supply capital to new entrepreneurs. As a result, it now exports copper, paper and pulp, fruit, and chemicals. Argentina has similarly embarked on a program to remove government from the everyday business of running the economy. The government has sold state-owned oil fields, petrochemical plants, and a number of other businesses to private companies.

M1 VS M2

M1 is physical money supply M2 is like deposits, money mutual funds... anything fund that is not easy to transfer

Describe the circumstances under which prices are consistent with a given level of real GDP.

Macroeconomic equilibrium is the point at which the level of real GDP is consistent with a given price level. It is determined by the intersection of the aggregate supply and demand curves.

Describe why, despite Malthus's predictions, certain parts of the world have enjoyed steadily increasing standards of living

Malthus did not foresee the enormous advances in productivity that allowed a rising standard of living to accompany a growing population. He also did not foresee that families might choose to have fewer children. Malthus's predictions may not have been entirely accurate for the industrialized countries, but they still have long-term consequences for all nations.

Explain what is meant by the statement that "markets talk."

Markets reflect the thoughts and feelings of buyers and sellers.

Discuss the effects of the multiplier and the accelerator

Multiplier implies that a change in investment spending will have a magnified effect on total spending the accelerator The combined multiplier-accelerator effect is important because it contributes to the instability of GDP.

Explain how the NASDAQ differs from the NYSE

Nasdaq is a dealer's market, with participants trading through a dealer rather than directly with each other, NYSE is an auction market, which enables individuals to transact between each other on an auction

Explain why international trade is important in today's economy

No country can produce all the required goods and services at the lowest opportunity cost possible. Hence it is not rational to produce everything domestically.

Explain how supply-siders would reduce the government's role in the economy

One way to do this is to reduce the number of federal agencies. Another way is to spend less at the federal level. An important mechanism of achieving this is called Deregulation. It is the relaxation or removal of government regulations on business activities.

Explain the two kinds of government spending

Payments for goods and services Transfer Payments

Discuss what is meant by the Law of Demand

People are going to buy more of a product when the price drops and less of a product when the price increases

Explain why the National Banking System was created during the Civil War

People feared that their money may become worthless and when they decreased in value people avoided using them forcing the government to find another way to pay for the war.

Discuss who benefits from economic security.

People who were laid off from their jobs benefit from state programs for economic security, and many employers have insurance plans to cover the injuries and illnesses of their workers. The Social Security program benefits people who are retired or disabled and their survivors. Elderly people also get Medicare health insurance.

Explain why prices are neutral

Prices are neutral because they favor neither the producer nor the consumer.

Describe four advantages of using prices as an allocating mechanism.

Prices are neutral, favoring neither producer nor consumer, and flexible, allowing the market economy to accommodate change. Price have no administrative costs and are efficient because they are understood by all.

Explain why the private sector is reluctant to produce public goods.

Privates will produce other things because they can't produce efficiently

Describe the costs and benefits of outsourcing.

Pro affects the jobs of the employees of the company following this business practice. Outsourcing might result in making the in-house employees of the company to lose their jobs or decrease their salaries Con The benefits of outsourcing are reducing or cut the costs , it is a good method for the company to save money.

Identify the purpose of collective bargaining

Process of negotiation between union and management representatives over pay, benefits, and job-related matters.

Identify two ways to increase productivity.

Productivity can be increased by investing in human capital and by using specialization under division of labor.

Describe the different types of tariffs

Protective tariff is a tax on an imported product designed to protect less-efficient domestic producers. Revenue tariff is a tax placed on imported goods to raise revenue for the government

Explain how public disclosure is used as a tool to prevent market failures.

Provide info that people want

Explain the difference between a depression and a recession

Recession is a part of business cycle constructing from two consecutive quarters of negative economic growth ( contraction ) as measured by a country's gross domestic product ( GDP). Recession is a significant decline in economic activity which lasts for few months. Recession has negative effects on the whole economy. Recession results in increasing the unemployment rate, productivity and the national income. Depression is a prolonged downturn in economic activity. Depression is considered to be a recession that lasts for two or more years( a sustained recession ). Depression has brutal negative effects on the economy. It leads to a decline in GDP and investments, It also increases the unemployment rate.

Describe the three major tools of monetary policy available to the Fed

Reserve requirement- the fed can change this requirement for all checking, time, and savings accounts. Open market operations- the fed's most popular tool allows the fed to influence short term interest rates. Discount rate- the interest the fed charges or loans to financial institutions.

Explain why new problems will arise in the economy, even as old ones are solved

Since the economic situation of a country does not remain constant the economy goes through business cycles giving rise to various problems. The policies are targeted at a certain aspect. Since there is no full proof plan for going about economic development, policies are diverse and the economy of a nation is dynamic

Explain why economic education is important

So they can be aware of he economic situations going on around them

Identify the two components of FICA.

Social security taxes, Medicare

Describe how taxes can be used to affect people's behavior.

Taxes can be placed on socially undesirable products to reduce their consumption (sin tax)

Explain why the U.S. government created the Federal Deposit Insurance Corporation

The FDIC was created to provide stability to the economy and the failing banking system.

Describe the advantages and disadvantages of a mixed economy.

The advantages of a mixed economy are that it provides assistance for some people who might otherwise be left out, like people who are too young, too old, or too sick to provide for themselves. The disadvantages of a mixed economy are that it leads to higher costs and higher taxes, and both socialism and communism are very inefficient.

Describe the role of the Board of Governors of the Fed

The board sets general policies for its banks to follow and regulates certain aspects of state chartered member banks' operations. It also helps make policies that affect the level of interest rates and availability of credit and it reports annually to congress and puts out a monthly bulletin that covers national and international monetary matters.

Identify the political and economic importance of the census.

The census is crucial to determining how many representatives each state elects to congress. The data collected by the census is also necessary for determining stats about the country based on a per capita basis. Political leaders may use information provided by the census to anticipate voting pattern. Local government agencies rely census data to plan for infrastructure, education and public services. Economically, the census is used to determine a number indicators such as dependency ratio, life expectancy and fertility rate.

Discuss the difference between a nonprofit and other forms of business organizations.

The difference between non profit organizations and other forms of business organizations is that the non profit institutions do not seek financial gain.

List the five major roles that the government plays in the economy

The four major roles that the government plays in the economy are protector, provider, regulator, and consumer.

Describe the way the government competes with the private sector

The government competes with the private sector by producing goods and services.

Explain why shortages and surpluses are not temporary when price controls are used

The government sets the price and it can't change, therefore equilibrium can't be reached.

People are going to buy more of a product when the price drops and less of a product when the price increases

The more of the same product you buy the less satisfaction one will receive from each product

Identify and describe two of the programs that have been used to stabilize farm incomes

The loan support program and deficiency payments.

Which of the following statements is/are normative?

The price of gasoline is rising

Describe the purpose of a labor union

The purpose of a labor union is to work for its members' interests

Discuss how the reserve requirement allows the money supply to expand

The reserve ratio is the percentage of reserves a bank is required to hold against deposits. A decrease in the ratio will allow the bank to lend more, thereby increasing the supply of money. An increase in the ratio will have the opposite effect

Identify the economic concept illustrated by the production possibilities frontier

There are many alternative ways of production, which is why it's called the "possibilities" frontier

Describe a demand schedule and a demand curve. How are they alike? How do they differ?

They are alike because they both show the quantity of demand and the price at that demand. They are different because one is a cluster and one is a graph.

explain How do the factors of production relate to one another?

They are all needed to make a business or company, almost impossible to do without all four. Labor Land Capital

Explain the role of the major nondepository financial institutions in the financial system

They help people through insurance, pension, and finance companies. They channel savings to borrowers

Explain how economic models help economists develop strategies that help people make economic choices

They reduce complex situations to their most basic elements

State the major dilemma that faces economic policy makers

This major dilemmas facing economic policy makers is how to make real GDP grow without unduly increasing the price level and thereby the rate of inflation.

What is the purpose of antitrust laws?

To make sure that other companies aren't driving out their competitors out of the market

Explain why the size of the population can create a problem for a developing country.

When a population grows rapidly, there are more people to feed, and a greater demand for services such as education and health care exists.

Explain how a society resolves conflicts between economic and social goals.

When conflicts arise between economic and social goals, the costs and benefits are compared, and people vote for the political candidates who back their position on how to resolve the trade-offs among goals.

Explain what is meant by the term market equilibrium

When the supply and demand curves intersect, the market is in equilibrium. This is where the quantity demanded and quantity supplied are equal. The corresponding price is the equilibrium price or market-clearing price, the quantity is the equilibrium quantity.

Discuss the deductions that are withheld from paychecks

Withholdings are amounts taken out of every employees' paycheck to pay their income taxes for that pay period.

describe the factors that can cause a change in supply

a change in supply can be caused by a cost of resources, productivity, technology, taxes and subsidies, expectations, government regulations, and number of sellers.

A city administrator with a $100,000 annual budget is trying to decide between fixing potholes or directing traffic after school at several busy intersections. Studies have shown that 15 cars hit potholes every week, causing an average of $200 in damages. Collisions at the intersections are less frequent, averaging one per month at an average cost of $6,000, although none have caused injuries or deaths. Use this information to answer the following questions. a. What are the annual costs from the pothole damage? b. What are the annual costs due to damage from collisions? c. Given the size of the annual budget, make your recommendation as to which project should be undertaken. Explain your answer in terms of dollar benefits per dollar spent.

a. 156,000 b. 72,000 c. https://www.slader.com/discussion/question/a-city-administrator-with-a-100000-annual-budget-is-trying-to-decide-between-fixing-potholes-or-directing-traffic-after-school-at-several-bu-c0840523/

Identify the strengths and weaknesses of a partnership.

advantage - the ease of start-up - ease of management - no special taxes on a partnership - easier to raise capital through bank loans or new partner - larger size aids efficient operations - easier to attract skilled employees. disadvantage - partners are responsible for the acts of each and every partner, except in a limited partnership where the limits are spelled out - limited life of partnerships ends if a partner leaves potential for partner conflicts.

Describe what goods and services are included in the GDP

all new goods and services produced in the current year—and summing them into a total dollar value.

Explain what determines a bond's current yield

annual interest divided by purchase

Describe the characteristics that make the U.S. economy a "modified free enterprise" economy

because its a free and command economy

Describe two attempts to facilitate the growth of international trade by using a graphic organizer like the one below

check doc

Explain the connections between the various measures of income using a graphic organizer like the one below.

check doc

Identify the factors influencing the increase or decrease of aggregate supply and aggregate demand by using a graphic organizer like the one below

check doc

Describe the major tax reform bills enacted since 1981

check doc 1- tax reform act of 1986it is provided the alternative income tax to avoid tax reductions and exemptions by rich individualist it cut marginal taxes from 50 to 30 percent 2- taxpayer relief act of 1997under this act , taxes on capital gains, gifts and inheritance were reduced it provided child tax credit 3- tax reform of 2001it cut taxes to increase individuals' income it cut the four marginal taxes

Identify and provide examples of the types of money used in different periods of American history by using a graphic organizer like the one below

check doc.

Identify the political costs of economic instability

citizens might lose trust and confidence in the government because the government is unable to control economy and the continuous rise of the prices of goods and services. In addition, employees would make strikes to get better employment condition and to get paid in cases there is no enough money to pay their salaries. Therefore, the unemployment rates might increase dramatically. Moreover, all of this might result in conflicts between various political parties and the disability of the government to take decisions. this all might result in the collapse of the government body.

describe several reasons for the rise of unions prior to 1930

civil war led to high prices, a greater demand for goods and services, and a shortage of workers, industry expanded, farm population declined, differences in culture and language between immigrants and American born workers began to change

Identify the factors one should consider when investing by completing a graphic organizer like the one below.

consistency, simplicity, risk-return relationship, investment objectives

Identify and describe the five factors that can cause change in individual demand

consumer taste, expectations, prize of substitutions, consumers, compliments

describe what is meant by externalities

cost or a benefit that arises from production and that falls on someone other than the producer or a cost or a benefit that arises from consumption and that falls on someone other than the consumer.

Explain how comparative advantage helps nations acquire goods, services, and the resources they otherwise lack

country saves money from it and use the money to import goods they lack or Therefore, nations specialize in a product or few products, export them and use the surplus to import other goods and services.

Identify the basic assumption supporting the theory of comparative advantage.

country that can produce at a lower cost should produce it everyone will be better off specializing in the products they produce best. This applies to individuals, companies, states, and regions as well as to nations.

Explain why Congress enacted the alternative minimum tax.

created because many high incomes find loop holes and not pay tax

Describe the characteristics of money

durability portability divisibility uniformity limited supply acceptability

Explain who makes economic decisions in a market economy.

economic decisions are made by the people. Consumers and businesses jointly answer the questions of what to produce, how to produce, and for whom to produce through the interaction of supply and demand.

List the three major categories of spending by local governments.

education, utilities, and hospitals

Explain the difference between elastic and Inelastic demand

elastic demand- a given change in price causes a relatively larger change in quantity demanded. inelastic demand- a given change in price causes a relatively smaller change in quantity demanded

identify the three types of elasticity

elastic supply - longer change in quantity supplied. Unit elastic - quantity of market doubles Inelastic - smaller change in quantity supplied.

Explain why equity markets are reasonably competitive

futures obligate each party to buy or sell. No choice while options give the holder the right (not the obligation) to buy or sell

Describe how the World Bank assists developing countries

helps nations to develop by loans and provides financial assistance and advice to developing countries.

Explain how the total expenditures test can be used to determine demand elasticity.

if expenditures go opposite directions the demand is elastic, same direction the demand is inelastic and if it doesn't change the unit is elastic.

Identify the five major weaknesses of a command economy.

ignores basic wants and needs of consumers, it gives people the incentive to fill their quotas instead of producing a good product, it requires a large decision-making bureaucracy, the bureaucracy lacks the flexibility to deal with minor day-to-day problems, and it rarely rewards individual initiative.

Explain why entitlements are so named.

include a right or eligibility to grant benefits to individuals or benefit them through programs by providing health programs or granting income supplements to individuals.

List the main sources of revenue for state and local governments by using a graphic organizer like the one below

intergovernmental revenues, insurance, income tax

describe what economist mean by supply

it is the amount of a product that would be offered for sale at all possible prices that could prevail in the market.

Identify the purpose of a balanced budget amendment.

limit government spending to the amount of money received in revenue. The federal government would have to control spending

Why is it more difficult for politicians to reduce mandatory spending than discretionary spending?

mandatory spending is set by the governing authority. Mandatory spending is in act as long as it is issued and does not require an approval by Congress. On the contrary, discretionary spending is not in act unless an approval by the congress approves it.

Describe the meaning and effect of a trade deficit.

meaning A country has a trade deficit whenever the value of the products it imports exceeds the value of the products it exports. effect A persistent trade balance can lead to a chain of reactions that affects income and employment EX. US trade deficit flooded the foreign exchange markets with dollars. The increase in the supply of dollars in world markets caused the dollar to lose some of its value, making imports more expensive for Americans and exports less expensive for foreigners.

Explain why countries would want to make a transition to capitalism.

most powerful engine for generating wealth the world has ever seen. Countries which are capitalistic have a higher per capita GDP than other nations

Describe how markets, products, and production increase globalization

multinationals move their production facilities to be nearer to customers

Identify the characteristics of Treasury notes, bonds, and bills.

notes- 2 to 10 years,6 month interest until it maturesbills- 30 years, 6 month interest until they maturebond- short term 4 to 52 weeks minimum denomination of $100

explain what happens when markets do not have enough competition.

people cannot depend on the free market system to allocate resources efficiently

Describe how financial assets are created in a free enterprise system.

people open a savings account, buy a bond, or purchase a certificate of deposit. these documents claim the property and income of the borrower. The documents are assets because they are property with value.

describe the key elements of studying economics

people, government, different industries, market

Explain why politicians insert "pork" items into other legislation

pork items would find a way around normal funding procedures and provide a government's spending which could be used to benefit their constituency's in return for their political support.

Explain the difference between the price level and the rate of inflation.

price of level is measuring the price of goods and services in the market. rate of inflation is measuring the increase in the average price level of a basket of selected goods and services in an economy over a certain period of time. In case that the average price level of goods and services is increasing , then the inflation rate is increasing and indicating that the country is facing a period of inflation and vice versa.

explain why trade was difficult in a barter system

products some people have to offer are not always acceptable or easy to divide for payment. Unless there is a "mutual coincidence of wants"- where two people want exactly what the other has and are willing to trade what they have for it - it is difficult for trade to take place.

describe the paradox of value

scarcity is necessary for something to have value

Explain why men and women are said to have "human capital" differences.

segregation (with more men in higher paid industries and women in lower paid industries) vertical segregation (fewer women in senior, and hence better paying positions)

Describe the historical growth of population in the United States

steadily decreasing or In the infancy of the country the growth rate was around 3%, however by the 20th century this had fallen to about 1.4%, and today the growth rate is below 1%. Additionally, the average size of household has declined as well as families have become smaller.

Explain why a sales tax is considered to be a regressive tax.

taxpayer will pay lower amount of tax as long as he purchases a product with higher price.

Explain how a developing country can attract foreign capital.

the arrangement must be beneficial to both the investor and the host country. Practices like expropriation should not be done. or Attract foreign investors who might be interested in the country's natural resources

Describe how the value of the dollar is established using a flexible exchange rate.

the forces of supply and demand establish the value of one country's currency in terms of another country's currency. hence demand and supply forces set the international value of dollar.

distinguish between the individual supply curve and the market supply curve.

the individual supply curve is for a single persons supply and the market supply is a graph for the whole market.

all opportunity costs are

the most desirable alternative given up as the result of a decision

explain how businesses determine their profit maximization output?

they compare marginal revenue with marginal costs to find the level of production that maximizes profit

discuss why businesses analyze their costs

they do this to compare the extra benefits of an action to the extra costs of taking the action.

Explain how tariffs and quotas protect American jobs.

they protect us workers from cheap foreign labors restricting the quantity of imports however they differ in the way restrictions are imposed. Tariff is a tax placed on an imported product quota is a limit on the amount of a good that is allowed into a country

Describe how economists sometimes differ in their views about the economy.

they think that some problems are more critical than others. Another reason economists differ is that most economic theories are a product of the times. The unemployment and other problems that occurred during the Great Depression influenced a generation of demand-side economists

Identify the original intent of the minimum wage.

to stabilize the post-depression economy and protect the workers in the labor force. designed to create a minimum standard of living to protect the health and well-being of employees.

describe the relationship between marginal cost and total cost

total cost - sum of the fixed and variable costs. Marginal cost - extra cost incurred when producing one more unit of output.

explain the difference between total product and marginal product

total product - the total output produced by the firm. Marginal product - the extra output or change in total product caused by adding one more unit of variable input.

Describe current union influence in terms of membership and workers represented by unions.

trade union (craft union): association with skilled workers who perform the same kind of work industrial union: an association of all workers in the same industry, regardless of the job each worker performs company union: a union organized, supported, or run by employers

Describe the main characteristics of a traditional economy.

use of scarce resources, and nearly all other economic activity, is based on ritual, habit, or custom. Individuals are not free to make their own economic decisions based on what they want or would like to have, as their roles are defined by the customs of their elders and ancestors.

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only three choices, what is the opportunity cost of reading?

watching videos

Explain the meaning of global interdependence

worldwide mutual dependence between countries. or mutual dependence at a worldwide level.