| A | B |
|---|
| scarcity comes about because | people's wants and needs are unlimited while the resources to fulfill them are limited |
| economic incentive | economic question decided by individuals in a marketplace |
| competition benefits | consumers and producers |
| if supply curve stays the same and demand increases | both quantity exchanged and price will increase |
| gross domestic product (gdp) | all the goods and services produced for one year |
| opportunity cost | something you give up |
| law of demand rule | consumers are willing to buy more of a good at lower prices than at higher prices |
| externalities | costs that are passed along to those outside of a market transaction |
| 3 basic questions economies must decide upon | what, how and for whom to produce |
| Adam Smith's concept of the invisible hand | pursuing one's own self-interest |
| banks borrow from the Federal Reserve Bank at a | discount rate |
| unemployment hurts the economy | people are not adding to the gdp |
| the rise in gas and oil prices resulting in overall inflation of goods and services in the economy is an example of | cost-push inflation |
| fiat money | its value is determined by the governmen |
| functions of the Federal Reserve System | bankers' bank, cashing checks, issues currency, controls money supply, act as a bank for the government |
| type of incentive of a parking ticket | negative |
| positive incentive of the National Park Service's preservation tax program | stimulating private business investment |
| reason for accepting a 15% off coupon for signing up for a store's mail promotions | like products from the store and plan to shop there |
| $50.00 reward from your parents for straight A's on your report card | positive incentive |
| consumer surplus | the difference between the buyers willingness to pay and the market price |
| demand curve | the measurement of responsiveness of the quantity demanded or the quantity supplied to a change in price |
| the "invisible hand" refers to | unintended consequences create positive events |
| important for production | land, labor, and raw materials |
| entrepreneurs | individuals who develop new products and start new businesses |
| market price | the economic price for which a good or service is offered in the market place |
| prices go up when | a good or service is in high demand, but the supply is short |
| prices become inelastic because | the demand remains constantly high |
| Adam Smith was a professor of | ethics and morality |
| Adam Smith thought Great Britain should do this to her colonies | let them leave |
| market place | decides what and how much is produce |
| economics is the study of human behavior in relation to | what how and for whom goods and services are produced |
| production of a product requires | resources and labor |
| economics can be referred to as the study of | scarcity |
| "no free lunch" | key economic principle |
| economic principles explain | financial decisions |
| income and time | limited amounts |
| the market | influences prices |
| common goals | are shared by individuals |
| business cycles have | peaks and troughs |
| for our economy, we need to | balance our saving and spending |
| risk can be limited by | making yourself valuable in the workplace, buy a house when you can afford it, diversify your investments |
| a model for effective decision making | identify the problem, determine the options |
| inflation | an increase in price |
| interest rates can be impacted by | the economy |
| supply and demand | fundamental economic principle |
| inelastic | price changes very little |
| equilibrium | when price exactly meets demand |
| Wealth of Nations | Adam Smith's book |
| imports | U.S. citizens buying foreign goods |
| exports | American goods purchased overseas |
| wages | income of workers |
| profit | revenue in excess of the cost of production |
| unintended consequences | when something happens that was not the goal |
| entrepreneurs | people who start businesses |
| scarcity | economics is the study of this |
| markets | reflects supply and demand |
| cost | plays a role in whether I purchase or not |
| unlimited | our wants are |
| opportunity cost | when we make a choice |
| utility | we maximize our happiness, satisfaction and well being |
| time | can be an opportunity cost |
| rationally self-interest | we are described as this when we make decisions |
| relative prices | when we spend our money, we think about these |
| recession | an economic downturn that lasts at least 2 quarters |
