Kameron Mitchell

Civics/Econ Final Exam Review

Civics Chapters 13, 17, and 18 Qualifications for President Formal: 35 years and older, must be born in the US, must be a resident for 14 years Informal: should have previous experience as a governor/senator, usually white (except for Obama) Presidential Election/Succession President is elected by Electoral College If Pres dies, then VP, then Speaker of the House, the Presidents cabinet US Foreign Policy Goals 1) Protect ourselves by having a big military and make partnerships 2) Make Peace in the World where everybody is safe and happy 3) Promote Economic Prosperity by letting cheap stuff get into the economy to boost the economy 4) Promoting Humanitarian Ideas and to try to promote freedom, democracy, human rights, and to prevent poverty Importance of Diplomacy is important because its the process of negotiating between countries Purpose of Sanctions are to prevent goods that could possibly hurt the US economy Types of Foreign Aid 1) Isolationism believes that the US should stay out of foreign affairs of other countries, nor should we give aid to needy countries - 2) Containment is when we should try to control or restrain countries that threaten peace 3) Disengagement is when we should avoid the use of our military at all costs (sort of a Pacifist view) 4) Human Rights is when we should use the USs great power to protect the rights of the weak and defenseless 5) Anti-terrorism is when we should try to destroy/undercut any terrorists groups and to keep nuclear weapons out of reach Purpose and Structure of UN Security Council made up of US, Britain, Russia, China, France, and 10 rotating countries every two years; purpose is that all countries will unite against an enemy Econ Chapter 1 Adam Smith is seen by many as the Father of Modern Economics, his book The Wealth of Nations spelled put many key ideas of Market Economies Resources anything that is used to produce a good or service Wants vs. Needs Wants are when people want something but dont absolutely need it, Needs are when people have to have something or it is a necessity to survive Scarcity means there is a limited amount of a good or service 7 Principles of Economic Thinking 1) Scarcity forces trade-offs: scarcity is when there is a limited amount of a good or service, trade-offs means that we choose one thing over another 2) Costs vs. Benefits- to get something, we must exert time/energy/resources (Costs) and receive something in return that brings comfort/happiness/gratification (Benefits) 3) Thinking at the Margins most decisions in everyday life involve small amounts of time or money. Marginal cost is what you give up to add to one more unit of activity. Marginal benefit is what you gain from adding one unit of activity 4) Incentives matter- Incentives are something that motivates a person to do a good job, most people respond well to that 5) Trade makes people better off- Nobody is an expert at everything. Trading to get the goods or services that we need from people who make or do those things will make our lives better off 6) Markets coordinate trade- a market is an arrangement that brings buyers and sellers together. To say that markets coordinate trade means that buyers and sellers will behave in ways that are beneficial to them 7) Future Consequences Count- though most of us are near sighted and want instant gratification, economists want to look down the road at the long term impacts of our decisions. The Law of Unintended Consequences says that there will always be unexpected consequences, good or bad Positive Economics attempts to describe how things are Normative Economics attempts to describe how things should be Econ Chapter 2 and 3 Utility is the satisfaction or pleasure you gain from consuming a product or service Marginal Utility is the extra pleasure you gain from another product or service: ei 1 candy bar = good, 2 candy bars = great

Market economy are based on individuals and businesses running the economy through voluntary exchange. People buy the best goods at the cheapest prices and work for companies that treat them well Traditional Economy are societies where custom, habit, ritual and tradition determines how and what gets made and who gets it Command Economy are systems where the government or a ruler makes the major economic decisions and people are forced to obey Opportunity Cost the value of the next best alternative that you choose Perpetual Resources like sun and wind power are essentially infinite Renewable Resources are things like fish, trees, and other thing that can be replaced Nonrenewable Resources like oil and coal are limited and will one day run out Econ Chapter 4 and 5 Specialization is an approach to production in which individual workers become highly skilled in one specific task Voluntary Exchange - is when people willingly give up something to get what they want Comparative Advantage is the ability to perform a task at a lower opportunity cost than someone else is able to perform that task. The idea is...build what youre best at, buy what youre not How does Trade benefit us 1) it puts goods in the hands of those who value them the most 2) it increases the variety and quantity of goods 3) it lowers the cost of goods (mass production) Economic Interdependence is the meaning that we rely/depend on other countries to produce items that we cant produce that will satisfy our needs and wants Law of Demand as the price of a good or service goes down, the demand rises and vice-versa Law of Supply states that as a price of a good goes up, producers will supply more of that good or service and vice-versa Econ Chapter 6 Market Equilibrium when the quantity of a good or service that people want matches up with the quantity of a good or service Equilibrium Price is the point at which consumers and producers are happy Shortage refers to a situation where there is not enough of a good or service to meet the demand of the good or service Surplus refers to a situation where there is too much of a good or service Econ Chapter 7 Monopolies are instances in markets where one company owns the whole branch of that market: ei Verizon owning the whole cell phone networks Oligopolies are instances in markets where a few companies own the whole branch of the market: ei Verizon, Sprint, and AT&T own the whole cell phone network Econ Chapter 8 Three Functions of Money 1) Medium of Exchange- much easier than bartering, money is considered legal tender, it must be accepted in paying off debts 2) Standard of Value- it allows us to measure and compare how much various goods and services are worth 3) Store of Value- money keeps its value over time Bonds is a loan where a borrower agrees to pay the fixed rate of investment over the term of the loan and pay back the principal at the end Stocks are slivers of ownership in a company Mutual Funds are a collection of securities selected by professional fund managers

Dividend is when companies make a profit, and stockholders receive profits Mortgages - is a loan secured by a property/house and paid in installments over a set period of time Econ Chapter 11 Externalities: Positive Externalities when the government makes public provisions, through programs like subsidies such as grants or low interest loans. Negative Externalities when the government may use command and control policies, where the government literally tells the company what to do, or market based policies which uses incentives to encourage businesses to behave in a certain way Subsidies are government programs such as grants or low-interest loans for lower class people Public Goods are things like public playgrounds/parks, libraries, fire station, police stations, etc. which are helpful to the public Econ Chapter 13 Business Cycle: 4 Stages 1) Expansion- typically lasts three to five years, period of strong economic growth 2) Peak- high point of an expansion, after which the economy begins to slow down 3) Contraction- a period of economic decline which foresees falling GDP and rising unemployment 4) Trough- lowest point of contraction, usually means that the economy is going to pick back up Recession periods of time in which there is a decline in economic activity for at least six straight months Depression are prolonged economic downturns where there is a high unemployment and significant drop in real GDP Inflation the percentage increase in the average price level in goods and services Types of Inflation 1) Creeping Inflation- this is the level of inflation that Americans have come to expect, about 3% or more 2) Hyperinflation- when the inflation rate skyrockets. This is very damaging to an economy as peoples money become worthless 3) Deflation- this is when prices go down over time. This is good for people who have saved their money but not so well for businesses GDP measures the value of goods and services produced by a country, based on market value Econ Chapter 14 Fiscal Policy refers to the governments power to tax and spend (and hopefully improve the economy) Monetary Policy is the Federal Reserves power to control the money supply and the interest rates Classical Economics founded by Adam Smith, believes that government should have minimal role in the economy. The budget should be balanced and taxing/spending should be kept low Keynesian Economics John Maynard Keynes argued that during times of economic crisis, the government has to step in and intervene. If the government stays out, demand will stay low, businesses will lay people off and it will become a viscous cycle Monetarism Economics rather than lack of demand, the problem in most downturns is a problem with the money supply. Thus, the Federal Reserve has primary responsibility for ensuring that the money supply is keeping pace with the economic growth Supply-Side Economics is when argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation Demand-Side Economics - is when argues that economic growth can be most effectively created by raising barriers for people to consume (demand) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation