Who makes all the important decisions in a command economy? the government, or Kojak.
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![Page 1: Who makes all the important decisions in a command economy? the government, or Kojak.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649e6f5503460f94b6cbe8/html5/thumbnails/1.jpg)
Who makes all the important decisions in a command
economy?
the government, or Kojak
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Who makes all the decisions in a free market economy? Who
is the father of this type of economics?
individuals, Adam Smeeeth
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What is the driving motivating factor in a
market economy?
self interest, actors respond to incentives
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Give three examples of nations with capitalist
economies.
United States, Canada, Great Britain, Japan, Mexico
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Identify three of the key rights that individuals have
in the United States economy.
private property, enter contracts, economic
competition, act on self interest, limited government
involvement
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What are 4 of the main economic goals of the United
States? Which of these is most difficult to achieve?
freedom, efficiency, equity, security, stability, and growth;
equity is most difficult to achieve
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What are the two main measures of economic
stability?
price stability & full employment
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What is used to measure the total productivity of an
economy?
Gross Domestic Product (GDP)
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What is Real GDP? Per capita GDP?
GDP adjusted for inflation; GDP divided by population
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What are the four components of the business
cycle?
expansion, peak, contraction, trough
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What does a leading indicator tell economists.
The direction the economy is headed in the future
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What are two key leading indicators?
housing starts, orders for durable goods, investment
in capital
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In a laissez faire system, what determines the price of
a given product?
Interaction of supply and demand
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What almost always happens to quantity demanded as
price drops?
it goes up
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What impact does increasing income have on demand?
it increases purchasing power which increases demand
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What are two other factors that greatly impact overall
demand?
market size (population), tastes and preferences, prices of related goods, consumer
expectations
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What is the substitution effect?
consumers will purchase a lower priced substitute if it’s
effective
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What is the name for reduced satisfaction achieved from
continued consumption of a particular good?
diminishing marginal return
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What does elasticity of demand measure?
the impact on demand of a price change in a particular
good
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If demand for a good changes little with changes
in price then demand is elastic or inelastic?
inelastic
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What are three key factors that affect elasticity?
availability of substitutes, relative importance, need or
want, how quickly price changes over time
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What does a supply schedule measure?
the amount supplied at a given price
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If producers are willing to produce a much larger quantity
with a small increase in price supply is considered elastic or
inelastic?
elastic
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What are two factors that cause shifts in supply?
price of resources, technology, competition, price of related goods, government activity
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What will suppliers do when there is excess demand?
Excess supply?
Raise their price to match equilibrium
Lower their price to match equilibrium
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What is the amount of additional cost required to produce one more unit?
marginal cost
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Where is market equilibrium?
where the demand curve hits the supply curve
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What is a shortage? a surplus?
a shortfall in the amount supplied, an excess of the
amount supplied
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What are the two ways of making money on a share of
stock?
Dividends (share of the profit) and appreciation (capital
gain)
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What does a “future” represent?
the right to buy a commodity (oil, pork bellies, corn, etc.) in
the future at a set price
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What are the two main types of bonds? Are they generally
more or less risky than stocks?
government and corporate, less
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What are low risk ways to invest money?
Money market account, CD’s, savings bonds, savings
accounts
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What is the strategy that spreads out investments to
reduce risk?
Diversification (investing in a variety of different things)
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What do mutual funds do?
Pool the savings of many individuals and invests money
in a variety of stocks
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What are the contracts that give investors the choice to
buy or sell stock at a set price in the future?
Options
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What is insider trading? Why is it illegal?
Making a stock sale based on information that has not been made public; unfair to rest of
market
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What is the primary influence the FED has over
the economy?
They can regulate the money supply by setting key interests rates, buying/selling securities,
and setting reserve requirements
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Who prepares the initial budget proposed to
Congress?
The President
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Which office manages development of this budget and negotiates between the
President and the various agencies?
Office of Management and Budget (OMB)
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Name two entitlements. What portion of the federal budget do they represent?
Medicare, Medicaid, Social Security, more than half
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What does Congress’ concurrent budget resolution
do?
Sets forth the spending and tax plan for the upcoming fiscal
year
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What is happening when House and Senate budget committees
fit the concurrent budget resolutions to the specific
needs of agencies and programs?
budget reconciliation
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What is the final step in the budgeting process after
reconciliation?
The House must issue an appropriations bill approving
the money to fund the budget
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What government agency is charged with maintaining high
standards for worker health and workplace safety?
Occupational Safety and Health Administration (OSHA)
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What government agency has primary responsibility for
overseeing investments and financial markets?
Securities Exchange Commission (SEC)
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What is the FTC responsible for?
Maintaining the needed conditions for fair trade, enforcing anti-trust laws
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When gov’t revenues exceed expenditures it’s called a ____.
When expenditures exceed revenue it’s a ______.
Surplus; Deficit
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What does the FDA do?
Responsible for maintaining and enforcing government
standards for the purity and safety of food and drugs
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What agency insures bank deposits up to $250,000?
FDIC
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Which agency works to ensure fairness in
employment and hiring practices?
Equal Employment Opportunity Commission (EEOC)
Equal Employment Opportunity Commission (EEOC)
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Which agency controls everything from broadcast spectrum to standards for
broadcast content?
Federal Communications Commission (FCC)