Praxis 5081 Economics questions & answers 2022

Praxis 5081 Economics questions & answers 2022All of the following flashcards were made from the book Praxis II Social Studies Content Knowledge (0081) REA: The Leader in Teacher Certification Prep. TestWare Edition. ... Wealth of Nations Written by Adam Smith, he is considered to be the founder of Economics. Adam Smith Wrote The Wealth of Nations. founder of the field of economics. Microeconomics The study of individual parts that make up the economy. Includes household, business firms, government agencies. Big focus on how these units make decisions and the consequences of these decisions. Macroeconomics The study of the economy as a whole, considers inflation, unemployment and economic growth. Scarcity Human wants and needs for goods and services EXCEED the ability of the economy to satisfy those wants and needs. There is never enough to go around. Opportunity Cost Reality of scarcity implies that individuals, businesses and governments must make choices, selecting some opportunities while foregoing others. EX: buying a car may mean forgoing a vacation. Buying a copy machine may mean canceling the company picnic. Individualism Individual action. "typical" individuals acting in a certain way, represents and ideal. Rational Behavior Individuals are assumed to act rationally. Most misunderstood term. People take action based off of goals and knowledge to achieve goals and avoid actions to detract from goals. Marginal Analysis People make choices by weighing the costs and benefits of particular actions. Specialization and Division of Labor Strategy of producing goods and services. Different members of a team given different goals in production plan. Specialization means that producers become apt at those aspects of production they concentrate on. These lead to efficiency which facilitates economic growth and development. Allocative Efficiency A society achieves this if it produces the types and quantities of goods and services that most satisfies its people. Failure to do so wastes resources. Technical Efficiency A society achieves this when it is producing the greatest quantity of goods and services possible Equity A society wants distribution of goods and services to conform with its options of "fairness" Needs Standard Under the Needs Standard, a persons contribution to society is irrelevant. Equality Standards Every person is entitled to an equal share of goods and services. Capital Productive implements made by human beings, e.g., factories, machinery, and tools. Scarcity Human needs are limitless, but resources to satisfy needs are limited. Consequently, society is never able to produce enough goods and services to satisfy everybody. Demand relationship between the price of a product and the amount consumers are willing and able to buy at each price. Supply relationship between the price of a product, and the amount producers are willing and able to supply. Economic Systems Tradition, Command, Market, Mixed, Capitalism, and Socialism Tradition Economic System slow to change, not well equipped to put society into sustained growth. Found mainly in poorer Third World countries. Command Economic System Command economies rely on a central authority to make decisions. Can be a dictator or democratically constituted government. Market Economy No central authority. Every consumer makes buying decisions based off of own needs and desires. Every producers decides what to supply, what to charge and what methods to use. Mixed Economy Contains combination of Market, Command and Traditional economy. Capitalistic Economy Capitalistic Economy is productive resources are owned by private individuals Socialist Economy productive resources are owned collectively by society. Alternatively, productive resources are under government control. GNP Gross National Product GNP is a measure of the dollar value of final goods and services produced by the economy over a given period of time. usually one year. Most comprehensive indicator of the economies health available, although it does not measure societies overall well-being. Functions of Money Medium of exchange(facilitates exchange of goods and services), unit of value (we say 25.00 not 14 chickens), Store of value (forms money can be stored in, bonds, stocks, gold etc.) , Standard of deferred payment(transactions). Required Reserves The amount of money a bank is legally obligated to hold. Excess reserves the difference between the amount of reserves a bank holds and what it is required to hold. Open Market Operations refers to the Fed's buying or selling of U.S government bonds in the open market. Influences amount of reserves in the banking system.