Can you Take all the information on this study guide and shorten it into information that can fit on an index card as a cheat sheet? Study Guide: Economics
Describe the characteristics of a “Traditional Economy”, and give a real world example. Traditional economies are economies that rely on tradition. Determines what to produce, how to produce, and for whom. Often have little technological advancements. A real world example would be an isolated community in Alaska
How do they determine “What” to produce?
Determined by what has always been produced
How do they determine “How” to produce?
Determined by the traditional established methods
How do they determine “Who” they are producing for?
Determined by family and community
Describe the characteristics of a “Command Economy”, and give a real world example.
Command economy, the government makes all decisions. They are what determines the What,How and who. A real world example is North Korea
How do they determine “What” to produce?
The government
How do they determine “How” to produce?
The government
How do they determine “Who” they are producing for?
The government
Describe the characteristics of a “Market Economy”, and give a real world example.
Prices are determined by supply and demand with minimal government intervention. Consumers drive production. The government's role is to protect property rights. Real life example would be the U.S
How do they determine “What” to produce?
Determined by consumer demand
How do they determine “How” to produce?
Determined by whatever is most efficient and cost effective.
How do they determine “Who” they are producing for?
Determined by the target market. All customer based
Economic/Social Goals: Definition & Example
Economic Freedom:
Freedom to make your own economic choices instead of the government. Like owning your own property and starting your own business. Government has little intervention
Economic Equity:
Fairness in distributions of economic resources. Ensures everyone has a chance to succeed.
Economic Security:
Assurance in making sure individuals and families have resources to meet basic needs. Food, shelter, and healthcare
Economic Growth:
Increase in production of goods and services in an economy over time. Measured by GDP which is overall improvement of the standard of living.
Economic Efficiency:
A state where all resources are allocated(process of distributing resources like money, people, equipment, or materials) to produce the max possible output of goods and services. Minimizes waste
Price Stability:
Situation where general prices of goods and services in an economy remain relatively stable.
Full Employment:
A situation where nearly everyone who wants a job can find one. Unemployment rate should be low
Economic Sustainability:
Ability of the economy to support a defined level of an economy to support a defined level of economic activity. Ensures future generations are able to meet their needs.
4. Define the term “Cultural Values”:
A society’s shared beliefs, principles, and practices that guide its members behavior. They influence what is acceptable within the community
5. How do cultural values affect the way a society might answer the three basic economic questions?(What to produce? How to produce? For whom to produce?)`
A society that values efficiency might favor mass production. But if your culture doesn’t value technology it may make production slower but the quality would be higher(How). A society that values tradition might prioritize producing traditional goods(What). A society that values achievement might reward the producers who have the most goods.
6. How do cultural values vary and influence production decisions? (How might cultures with different values produce things differently?)
A culture that values the environment may prioritize environmentally friendly production. Culture plays a very big role in production because of tradition.
7. How might cultural values change over time to affect the production decisions of various economic systems? Think of an example to prove your point.
A shift towards environmental sustainability has led to an increase in demand for eco-friendly products.
8. What is a “Natural Resource”? Provide 3 examples.
Something found in nature that is useful to people like wood, water and coals
9. What is a “Capital Resource”? Provide 3 examples. A manufactured item used to produce goods and services. Examples: machinery, tools and buildings.
10. What is a “Human Resource”? Provide 3 examples.
A human resource is the people who work to produce goods and services. Examples: Teachers, entrepreneurs and engineers.
11. Define the term “Scarcity”, and provide an example to explain the concept.
When there is not enough supply for the demand. For example, not enough oil for all the cars in the world to have gas
12. Define the term “Opportunity Cost”, and provide an example to explain the concept.
The trade off for getting what you want. For example, having to give up money in order to get something you want
13. GDP stands for Gross Domestic Product.
14. The definition of GDP is the market value of all finished goods and services produced within a country in a year.
15. What is an intermediate good?
A good that is used in the making of another good and is part of the finished product
16. True or false: An intermediate good is counted towards GDP.
17. What is an example of a finished good?
A pizza
18. If a restaurant buys a pizza stone this year to make pizza, will the pizza stone count towards GDP? Why or why not?
No because it is a intermediate good
19. If you buy a sweater from the thrift store (or on eBay), does this count towards GDP? Why or why not? No because it sent newly produced
20. If an Italian buys some jewelry you made in January at your home and sold on Etsy, does this count towards U.S. GDP? Why or why? Yes because it was made in the U.S
21. If you buy some avocados from Mexico, does this count in GDP? Why or Why not? No because it isn’t made in the U.S
22. Define the term “Production”. How is production impacted by:
Availability of Resources:
The more readily available these resources are, the more efficient and profitable production can be.
Cultural Beliefs:
Could go slower if the culture doesn’t believe in technology
The type of Economic System:
Market economy, driven by consumers. If a good doesn’t have a high demand not as much of it will be produced.
Command, the government controls it. This leads to lack of consumer demand.
Traditional, production is based on customs
23. What is “GDP Per Capita”?
The measure of a country's economic output divided by its population
24. How can “GDP Per Capita” be used to measure “Standard of Living”? Have specific examples to prove your answer.
It reflects the average income level of individuals in a country, indicating access to goods and services
Economics:
Productive Resources
Scarcity: state of being in short supply
Shortage: a state in which something needed cannot be obtained in sufficient amounts
Surplus: amount or quantity that is greater than what is needed
Needs/Necessities: something you have to have in order to live
Wants/Luxuries: something that would be nice to have
Finished Goods: goods that completed the required manufacturing to be a final product.
Three Factors of Production:
o Land: all natural resources
o Labor: human effort
o Capital: manufactured goods used in production process
Macroeconomics: macroeconomics is the study of the economy as a whole
Basic Microeconomics Supply and Demand
- Demand Definition: insistent request
Law of Demand: When the price of a product goes up, the quantity demanded will go down. Vice versa
List the Factors/Determinants that Influence the Shifts in Demand:
Change in income, change in taste and preference, change in substitute goods, population size, change in future expectations.
Supply Definition: the amount available
The Law of Supply: As prices increase, quantities supplied also increases.
List the Determinants/ Factors that Influence the Shifts in Supply:
change in price, change in future expectation, change in # of resources, change in producers, change in price of related good.
Equilibrium Definition:
Unemployment Impacts: Lower income, poverty, and social problems like divorce and alcoholism. Unemployment also means that resources are underutilized and the output of society is also decreased.
Unemployment Definition: the percentage of people who are actively seeking employment
Who is in the Civilian Labor Force?
Yes, part of labor force
No, not part of labor force
16 or older
Non military
U.S citizens
under 16
Military
People who are retired
Disabled
GDP, or Gross Domestic Product
o Definition: total value of goods produced and services provided in a country during one year.
GDP = Consumption + Government Spending + Investment + Net Export o Per
GDP per Capita: measure of a country's economic output divided by its population
Money and Monetary Policy
Definition of Money: an exchange used for transaction
o The Federal Reserve Definition
The Functions of the Fed: central Bank of America, oversees the nations monetary and financial system
1 answer
Economics Cheat Sheet
Economic Systems:
Traditional Economy:
Relies on tradition, minimal tech.
Example: Isolated community in Alaska.
What: Tradition-based.
How: Established methods.
Who: Family/community.
Command Economy:
Government makes all economic decisions.
Example: North Korea.
What/How/Who: Determined by government.
Market Economy:
Prices set by supply/demand, minimal government intervention.
Example: U.S.
What: Consumer demand.
How: Efficiency/cost-effectiveness.
Who: Target market.
Economic/Social Goals:
Economic Freedom: Choice in economic activities.
Economic Equity: Fair distribution of resources.
Economic Security: Resources to meet basic needs.
Economic Growth: Increase in production (GDP).
Economic Efficiency: Optimal resource use.
Price Stability: Stable prices for goods/services.
