Economics Final Exam

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Author:
kellyd
ID:
126837
Filename:
Economics Final Exam
Updated:
2012-01-09 19:32:39
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Economics
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Description:
Alan Bhrem final exam
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  1. Credit: Good Credit (credit cards)
    • Convenient
    • Security
    • Emergency
    • Rewards
  2. Credit: 3 C's of Credit
    • Character - Credit history
    • Collateral - What you put up
    • Capacity - Ability to pay loan
  3. Entreprenuership: Success Determinants
    • Biological - Traits
    • Sociological - Networking
    • Geographical - Location
  4. Production Values
    • Efficiency
    • Profit
    • Quality vs. Quantity
    • Work Ethic
  5. Consumption Values
    • Comfort
    • Convenience
    • Spending vs. Saving
    • Social Status
    • Price Expectancy
    • Needs vs. Wants
  6. Regulation:
    • Health
    • Safety
    • Prices (in a natural monopoly)
  7. Natural Monopoly
    When industry has large economies of sale to lower their prices to prevent competition
  8. Types of Price regulations:
    • Price Cap
    • Price Plus (whatever the cost to make + percent for profit) (no urge for innovation)
  9. Gov. regulations are needed to...
    Keep firms out of the ground when competition isn't enough
  10. Regulatory Capture
    Start believing they help company and workers instead of competition
  11. Deregulation...
    • Lowers prices
    • Better responses
    • Only profit seeking firms seek innovation
  12. Externalities: Negative outcome
    By product of production cost born by 3rd part. Product first, consumer second.

    Ex. Air pollution from buring fossil fuels.
  13. Externalities: Positive outcome
    By product of production enjoyed by 3rd party.

    Ex. Immunization preventing one person from being sick also prevents them from spreading illness
  14. Fiscal Policy
    The use of government expenditure and revenue collection (taxation) to influence the economy
  15. 2 Main instruments of fiscal policy
    • Government expenditure
    • Taxation
  16. Changes in the level and composition of taxation and government spending can impact the following variables in the economy:
    • Aggregate demand and the level of economic activity
    • The pattern of resource allovation
    • The distribution of income
  17. Monetary Policy
    The government's control of the availability and cost of money
  18. The official goals usualy include:
    • Relatively stable prices
    • Low unemployment
  19. The Federal Reserve System (Central Bank)
    • 7 members on a board of governers
    • 12 physical banks
    • FOMC (federal open market committee) - 5 bank presidents (always one from NY) plus the 7 board members
  20. Tools of Monetary Policy
    • FOMC: Open Market Operations (Most influence): Buying and Selling bonds
    • Reserve Rate: Minimum reserves each commercial bank may hold (rather than lend out) of customer deposits and notes
    • Discount Rate: The interest rate at which federal reserve banks make very short-term loans to banks. The rate that the centeral bank gives to their preferred customers (other banks)
  21. Demand Pull
    Pulls up prices
  22. Cost Pushing
    Cost can push up pricef
  23. Redistribution of Income
    • Does not usually go to the poor
    • Ex. Welfare, Medicare, Social Security
  24. Unemployed
    Total number of adults 16+ willing and able to work and are actively searching for a job
  25. Unemployment Rate
    Number of unemployed divided by the number of people in the labor force
  26. Types of Unemployment
    • Frictional: Bathtub model, dynamic flow entering and leaving unemployment. No government influence
    • Structural: Lack of skills/education. No government influence
    • Seasonal: Ex. Santa Clause, Lifeguards. No government influence
    • Cyclical: Follows business cycle. Government influence
  27. Categories of Unemployment
    • Re-entrants
    • New-entrants
    • Job losers
    • Job leavers
  28. Inflation
    An average of all prices, goods, and services as they're rising. Often unanticipated and unpredictable.
  29. TANF
    • Temporary Assistance for Needy Families
    • The US' main general welfare federa assistance programs
  30. AFDC
    • Aid to Families with Dependent Children
    • Federal assistance program provided financial assistance to children of single parents or whose families had no income

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