Chapter 1

Karl Marx

Introduced their socialist philosophy in the Communist Maifesto in 1848

Scarcity

Limited quantities of resources to meet unlimited wants

Goods

Physical objects such as clothes or shoes

Economics

The study of how people seek to satisfy their needs and wants by making choices

work ethic

a commitment to the value of work and purposeful activity; a system of values that gives central importance to work.

business cycle

a period of macroeconomic expansion followed by a period of contraction

Guns or Butter

a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods

incentive

an expectation that encourages people to behave in a certain way

poverty threshold

an income level below which income is insufficient to support families or households

Capital

any human-made resource that is used to produce other goods and services

Land

natural resources that are used to make goods and services

production possibilities frontier

shows all the combinations of goods that a country can produce given its productivity and supply of inputs

Need

something like air, food, or shelter that is necessary for survival

Want

something that people desire but that is not necessary for survival

private property rights

the concept that people have the right and privilege to control their possessions as they wish

human capital

the knowledge and skills a worker gains through education and experience

opportunity cost

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

private sector

the part of the economy that involves the transactions of individuals and businesses

public sector

the part of the economy that involves the transactions of the government

techonology

the process used to produce a good or service

Competition

the struggle among producers for the dollars of consumers

Macroeconomics

the study of behavior and decisions making the entire organization

Microeconomics

the study of the economic behavior and decision making of small units, such as individuals, families, and businesses

Cost

to an economist, the alternative that is given up because of a decision

Efficiency

using resources in such a way as to maximize the production of goods and services

Adam Smith

was a Scottish social philosopher who, in 1776, published a book titled "The wealth of is" in which he described how markets function.

Ben Bernanke

An American economist in Brooking institutions who served two terms as chair of the Federal Reserve.Best known for monetary economics. -Founder

Milton Friedman

An American economist who recieved a noble prize in 1976 for his economist research of science: Consumption analysis, monetary history, and other complexity of stabilization policy

command economy

An economic system in which the government makes all economic decisions on the productions and consumption of goods and services

Friedrich Hayek

An economist noted for his criticisms of Keynesian welfare state and of totalitarian socialism

Interest group

a private organization that tries to persuade public officials to act or vote according to group members' interests

public goods

a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers

Shortage

a situation in which a good or service is unavailable

Socialism

a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society

Physical Capital

all human-made goods that are used to produce other goods and services; tools and buildings

Entrepreneur

ambitious leader who combines land, labor, and capital to create and market new goods and services

Trade off

an alternative that we sacrifice when we make a decision

free enterprise

an economic system in which private business operates in competition and largely free of state control.

market economy

economic system in which decisions on productions and consumption of goods and services are based on voluntary exchanges in markets

traditonal economy

economic system in which the allocation of scarce resources and other economic activity is the result of ritual, habit, or custom

welfare

government aid to the poor

law of increasing costs

law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases

Self interest

one's own personal gain

production possibilities curve

A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.

John Maynard Keynes

A government official, teacher, and a writer, John Maynard Keynes is one of the handful of economist who have substantially affected the course of history. Theories: Supply, Demand, and unemployment.

Services

Actions or activities that one person performs for another

Thomas Malthus

British philosopher economist noted for the Malthusian growth model, an exponential formula used to project population growth...

Compare and contrast the theoretical principles of the economic systems of capitalism, socialism, and communism, and use of historical examples to provide evidence of their effectiveness.

Communism and socialism are two types of command system. In socialistic economic system the government own most land but individual cannot control. Capitalism is an economic and political system in which a country's trade and industry are controlled by private owner for profit, rather than by the state. Examples of Communism- Cuba and the hospital beds. Examples of Socialism- North Korea lacking stock for a charge. Examples of Capitalism- Great powers during WWI and WWII government controlled the inventory and output of production.

Identify and explain the broad goals of economic policy such as freedom, efficiency, security, growth, price stability, and full employment.

Economic Efficiency - Refers to well scarce productive resources are allocated to produce, Equality- This means what is fair. economic action and policies have to be evaluated in terms of what people think it's right or wrong. Freedom - decided how to spend or save their income the freedom of workers to change jobs and join unions and freedom..... Security- protecting costumers, producers, and resources owners from risk exist in society. Stability- maintaining prices and full employment Growth- refers to increasing the productions of goods and services over time. Economic growth is measured by changes in the level of real domestic gross. 3 to 4 percent in real GDP.

Laissez-faire

Idea that government should play as small a role as possible in economic affairs.

factors of production

Land, labor, and capital; the three groups of resources that are used to make all goods and services

Describe how people respond predictably to positive and negative incentives.

Negative incentives leave you worse off financially by making you pay money

Describe how clearly defined and enforced property rights re-essential to a market economy.

Property rights send clear signals on who is rewarded for caring the resources and who is liable if it used poorly.

Explain how consumers and producers confront the condition of scarcity, by making choices that involve opportunity cost and trade-offs.

Scarcity affects producers because they have to make a choice on how to best use their limited resources. It affects costumers because they have to makes choice on what services or good to choose.

Gross Domestic Product (GDP)

The total output of all economic activity in the nation, including goods and services.

Use a production possibilities curve to explain the concepts of choice, scarcity, opportunity cost, trade-offs unemployment, productivity, and growth.

These graphs show an increase of each producer or lose, depending on the supply that they have in store, so if there was a fewer good then they would look at the frontier A production possibilities curve reflects the country's resources were frozen in time.

Compare and contrast how the various economic systems (traditional, market, command, and mixed) try to answer the question: what to produce? How to produce it? For whom to produce it?

Traditional refers to farming or more like agriculture, meaning this goes to a group of families and produces battering from it. The market is what which individual decided to buy from costumers. The command is a more centralized economy in which government planning groups make basic economic decisions for the workers. This will be able to set up wages to pay workers. Mixed is when all the economies in the world have characteristics of both markets and command economic systems. A market economy is when one individual decides what to produce and what to produce is profit to contribute towards goods and services.

Communism

a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government

Explain the voluntary exchange occurs when all participating parties expect to gain.

Voluntary exchange occurs only when all participating parties expect to gain. Meaning people must buy exchange items to have a better exchange.