Praxis II 5081 Economics

Reserves

A bank's monetary holdings.

Gross National Product

A measure of the dollar value of final goods and services produced by the economy over a given period time.

Circular Flow

A model of economic relationships in a capitalistic market economy.

Needs Standard

A person's contributions are irrelevant. Goods and services are distributed based on the needs of different households.

Supply

A schedule or graph showing the relationship between the price of a product and the amount producers are willing and able to supply.

Buisness Cycle

Alternating periods of prosperity and recession that seem to characterize all market based economies.

Mutual Funds

An investment fund managed by a private financial company.

Deposit Accounts

An investment fund that is managed by a commercial bank.

Money

Anything that is generally acceptable in exchange for goods and services and in payment of debts.

Marginal Analysis

Assume that people make choices by weighing the cost and benefits of particular actions.

Demand Deposits

Checking accounts held in commercial banks. Funds are transferred by means of a check.

Currency

Coins and paper money.

Adam Smith

Considered to be the founder of ecomonics

Consumer Sovereignty

Consumers determine what is produced in the economy.

Division of Labor

Different members of a team of producers are given responsibility for different aspects of a production plan.

Ceteris Paribus

Economic assumption which means all other factors held constant.

Equality Standard

Every person is entitled to an equal share of goods and services, simply because they are a human being.

Barter Economy

Goods and services exchange directly for other goods and services.

Scarcity

Human wants and needs exceed the ability of the economy to satisfy those wants and needs.

Services

Intangible items, ex. education, health care, and lesiure.

Six categories of Resources

Land, Labor, Capital, Entrepreneurship, Technology, and Scarcity.

Functions of Money

Medium of Exchange, Unit of Value, Store of Value, and Standard of Deferred Payment.

Transfer Payments

Money or in-kind items given to individuals or businesses for which the government receives no equivalent good or service in return.

Allocative (Economic) Efficency

Occurs when society produces the types and quantities of goods and services that most satisfies its people.

Financial Intermediaries

Organizations such as commercial banks, savings and loan institutions, credit unions, and insurance companies.

Contributory Standard

People are entitled to a share of goods and services based on what they contribute to society.

Contraction

Period of declining business activity.

Specialization of Labor

Producers become quite apt at those aspects of production they concentrate on.

Resource

Refers to anything that can be used to produce goods and services.

Command Economy

Rely on a central authority to make economic decesions.

Traditional Systems

Rely on custom to determine production and distribution questions. They are slow to change and found in poor Third World countries.

Demand Schedule

Shows the relationship between the price and the quantity demanded.

Law of Increasing Cost

States that as more of a good or service is produced, its opportunity cost will rise.

Goods

Tangible ex. food, cars, and clothing

Rational Behavior

That given a person's goals and knowledge, people take actions likely to achieve those goals and avoid actions likely to detract from those goals.

Public Sector

The activities of the government.

Required Reserves

The amount a bank is legally obligated to hold.

Required Reserves Rato

The amount of reserves a bank must hold. Is a number from 0 to 1.00 that determines the level of reserve holdings in relation the the bank's deposits.

Excess Reserves

The difference between the amount of reserves a bank holds and what it is required to hold.

Liquidity

The ease with which an asset can be transformed into spendable form.

Classical, Keynesian,Monetary,and Neoclassical

The four general view points about the workings of markets is?

Peak

The high point of business activity.

Discount Rate

The interest rate the Fed charges on loans.

Market Equilibrium

The intersection of the demand and supply curves.

Secular Trend

The long run direction of movement of a variable.

Trough

The low point of business activity.

Expansion

The period of growing business activity.

Capitalism

The productive resources are owned by private individuals.

Socialism

The productive resources are owned collectively by society and are under control of the government.

Demand

The relationship between the price of a product and the amount consumers are willing and able to buy.

Macroeconomics

The study of the economy as a whole, considers inflation, unemployment, and economic growth.

Microeconomics

The study of the individual parts that make up the economy, includes households, business firms, and government agencies.

Law of Demand

There is an inverse relationship between price and quantity demand; people will be willing and able to buy more if the product gets cheaper.

Federal Reserve System

To oversee the stability of the banking system and conduct monetary policy to the end of fighting inflation and unemployment and stimulating economic growth.

Technical Efficiency

When society is producing the greatest quantity of goods and services possible from its resources.

Wealth of Nations

published in 1776; analysis of a market economy

Equity

society wants distribution of goods and services to conform with the notion of "fairness".