Economics - SS1111. Revised 9/30/10 Page 1 of 12

Transcription

1 Introduction to Economics What Is Economics? Scarcity and the Factors of Production Explain why scarcity and choice are basic problems of economics. Identify land, labor, and capital as the three factors of production, and identify the two types of capital. Explain the role of entrepreneurs. Explain why economists say all resources are scarce. Basic Economic Concepts Explain the relationship among scarcity, value, utility, and wealth. Understand the circular flow of economic activity. Opportunity Cost Describe why every decision involves trade-offs. Explain the concept of opportunity cost. Explain how people make decisions by thinking at the margin. Production Possibilities Curves Interpret a production possibilities curve. Demonstrate how production possibilities curves show efficiency, growth, and cost. Understand that a country's production possibilities depend on its available resources and technology. Economic Systems Answering the Three Economic Questions Identify the three key economic questions of what to produce, how to produce, and who consumes what is produced. Analyze the societal values that determine how a country answers the three economic questions. Explain the characteristics of traditional, command, and market economies and describe the societal values that influence them. The Free Market Explain why markets exist. Analyze a circular flow model of a free market economy. Understand the self-regulating nature of the marketplace. Identify the advantages of a free market economy. Centrally Planned Economies Describe how a centrally planned economy is organized. Analyze the centrally planned economy of the former Soviet Union. Identify the problems of a centrally planned economy. Revised 9/30/10 Page 1 of 12

2 Modern Economies Explain the rise of mixed economic systems. Interpret a circular flow model of a mixed economy. Compare the mixed economies of various nations along a continuum between centrally planned and free market systems. Understand the role of free enterprise in the economy of the United States. American Free Enterprise Benefits of Free Enterprise Describe the tradition of free enterprise in the United States and the constitutional protections that underlie it. Explain the basic principles of the U.S. free enterprise system. Identify the role of the consumer in the U.S. free enterprise system. Describe the role of the government in the U.S. free enterprise system. Promoting Growth and Stability Explain how the government tracks and seeks to influence business cycles. Analyze how the government promotes economic strength. Analyze the effect of technology on productivity. Providing Public Goods Identify examples of public goods. Analyze market failures. Evaluate how the government allocates some resources by managing externalities. Providing a Safety Net Summarize the U.S. political debate on ways to fight poverty. Describe the main programs through which the government redistributes income. Introducing Microeconomics: How Markets Work Demand What Is Demand? Describe and illustrate the concept of demand. Explain how demand and utility are related. Factors Affecting Demand Explain what causes a change in quantity demanded. Describe the factors that could cause a change in demand. Elasticity of Demand Explain why elasticity is a measure of responsiveness. Analyze the elasticity of demand for a product. Understand the factors that determine demand. Revised 9/30/10 Page 2 of 12

3 Supply Prices Understanding Supply Explain the law of supply. Interpret a supply graph using a supply schedule. Explain the relationship between elasticity of supply and time. Costs of Production Explain how firms decide how much labor to hire to produce a certain level of output. Analyze the production costs of a firm. Understand how a firm chooses to set output. Explain how a firm decides to shut down an unprofitable business. Changes in Supply Identify how determinants such as input costs create changes in supply. Identify three ways that the government can influence the supply of a good. Understand supply and demand in the global economy. Analyze the effects of other factors that affect supply. Combining Supply and Demand Explain how supply and demand create balance in the marketplace. Compare a market in equilibrium with a market in disequilibrium. Identify how the government sometimes intervenes in markets to control prices. Analyze the effects of price ceilings and price floors. Changes in Market Equilibrium Identify the determinants that create changes in price. Explain how a market reacts to a fall in supply by moving to a new equilibrium. Explain how a market reacts to shifts in demand by moving to a new equilibrium. The Role of Prices Analyze the role of prices in a free market. List the advantages of a price-based system. Explain how a price-based system leads to a wider choice of goods and efficient allocation of resources. Describe the relationship between prices and the profit incentive. Revised 9/30/10 Page 3 of 12

4 Market Structures Perfect Competition Describe the four conditions that are in place in a perfectly competitive market. List two common barriers that prevent firms from entering a market. Describe prices and output in a perfectly competitive market. Monopoly Describe characteristics and give examples of monopoly. Describe how monopolies are formed, including government monopolies. Explain how a firm with a monopoly sets output and price, and why companies practice price discrimination. Monopolistic Competition and Oligopoly Describe characteristics and give examples of monopolistic competition. Explain how firms compete without lowering prices. Understand how firms in a monopolistically competitive market set output. Market Failures Discuss the problems caused by inadequate competition. Understand the importance of having adequate information. Describe the nature of resource immobility. Explain the nature of positive and negative externalities. Regulation and Deregulation Understand how firms use market power. List three market practices that the government regulates or bans to protect competition. Define deregulation, and list its effects on several industries. Business and Labor Business Organizations Sole Proprietorships Explain the characteristics of sole proprietorships. Analyze the advantages of a sole proprietorship. Analyze the disadvantages of a sole proprietorship. Partnerships Compare and contrast the different types of partnerships. Analyze the advantages of partnerships. Analyze the disadvantages of partnerships. Revised 9/30/10 Page 4 of 12

5 Corporations, Mergers, and Multinationals Explain the characteristics of corporations. Analyze the advantages of incorporation. Analyze the disadvantages of incorporation. Compare and contrast corporate combinations. Describe the role of multinational corporations. Other Organizations Understand how a business franchise works. Identify the different types of cooperative organizations. Understand the purpose of nonprofit organizations, including professional and business organizations. Employment, Labor, and Wages The Labor Movement Explain why unions are still important today. Discuss the development of the labor movement from the late 1700's to the 1930's. Relate labor's successes during the Great Depression. Describe the major labor developments since World War II. Resolving Union and Management Differences Explain the differences among kinds of union arrangements. Describe several ways to resolve labor and management differences when collective bargaining fails. Labor and Wages Identify four main categories of labor. Explain the importance of noncompeting labor grades. Describe three different approaches to wage determination. Employment Trends and Issues Explain why union membership has declined. Describe reasons for the discrepancy in pay between men and women. Money, Banking, and Finance Money and Banking Money Describe the three uses of money. Explain the six characteristics of money. Understand the sources of money's value. Revised 9/30/10 Page 5 of 12

6 The History of American Banking Describe the shifts between centralized and decentralized banking before the Civil War. Explain how the banking system was stabilized in the later 1800s. Describe developments in banking during the twentieth century. Banking Today Explain how the money supply in the United States is measured. Explain the functions of financial institutions. Identify different types of financial institutions. Understand the changes brought about by electronic banking. Financial Markets Savings and the Financial System Explain why saving is important for capital information. Explain how the financial system works to transfer funds from savers to borrowers. Understand the role of the major nondepository financial institutions in the financial system. Investment Strategies and Financial Assets Identify four important investment considerations. Describe the three characteristics of bonds. Describe the characteristics of major financial assets. Understand four views of market for financial assets. The Stock Market Understand the benefits and risks of buying stock. Describe how stocks are traded. Identify how stock performance is measured. Explain the causes and effects of the Great Crash in Introducing Macroeconomics: Measuring Economic Performance Economic Instability Unemployment Describe frictional, seasonal, structural, and cyclical unemployment. Describe how full employment is measured. Explain why full employment does not mean that every worker is employed. Revised 9/30/10 Page 6 of 12

7 Inflation Explain the effects of rising prices. Understand the use of price indexes to compare changes in prices over time. Identify the causes and effects of inflation. Describe recent trends in the inflation rate. Poverty Define who is poor, according to government standards. Describe the causes of poverty. Analyze the distribution of income in the United States. Summarize government policies intended to combat poverty. Business Cycles and Fluctuations Explain the phases of the business cycle. Identify five causes of the business cycles. Economic Performance Measuring the Nation's Output Explain how Gross Domestic Product (GDP) is measured. Describe the limitations of GDP. Understand the importance of GDP. GDP and Changes in the Price Level Explain how a price index is constructed. Describe three price indices. Understand the difference between real and current GDP. GDP and Population Explain how population is estimated in the U.S. Describe the factors affecting future population growth. Economic Growth Describe how economists measure the growth of the United States economy. Explain the importance of economic growth. Outline the factors of economic growth. Revised 9/30/10 Page 7 of 12

8 Government and the Economy Sources of Government Revenue The Economics of Taxation Explain the economic impact of taxes. List the three criteria for effective taxes. Understand the two primary principles of taxation. Understand how taxes are classified. The Federal Tax System Explain the progressive nature of the individual income tax. Describe the importance of the corporate tax structure. Identify other major sources of federal revenue. State and Local Tax Systems Explain how state governments collect taxes and other revenues. Differentiate between state and local revenue systems. Interpret paycheck deductions. Current Tax Issues Describe the major tax reforms since Debate the advantages and disadvantages of the value-added tax. Explain the features of a flat tax. Discuss why future tax reforms will occur. Government Spending The Economics of Government Spending Explain why and how government expenditures have grown since the 1940s. Describe two kinds of government expenditures. Describe how government spending impacts the economy. Federal Government Expenditures Explain how the federal budget is established. Describe the parts of the federal budget. State and Local Government Expenditures Explain how state and local governments approve spending. Identify the major categories of state government expenditures. Identify the major categories of local government expenditures. Revised 9/30/10 Page 8 of 12

9 Fiscal Policy Understanding Fiscal Policy Describe how the government uses fiscal policy as a tool for achieving its economic goals. Explain how the government creates the federal budget. Analyze the impact of fiscal policy decisions on the economy. Identify the limits of fiscal policy. Fiscal Policy Options Compare and contrast classical economics and Keynesian economics. Explain the basic principles of supply-side economics. Understand the role that fiscal policy has played in American history. Budget Deficits and the National Debt Explain the importance of balancing the budget. Analyze how budget deficits add to the national debt. Summarize the problems caused by the national debt. Identify how a government can reduce budget deficits and the national debt. The Federal Reserve and Monetary Policy The Federal Reserve System Describe the structure of the Federal Reserve System. Explain the major regulatory responsibilities of the Fed. Federal Reserve Functions Describe how the Federal Reserve serves the federal government. Describe how the Federal Reserve serves banks. Describe how the Federal Reserve regulates the banking system. Understand the Federal Reserve's role in regulating the nation's money supply. Monetary Policy Describe the use of fractional reserves. Understand the tools used to conduct monetary policy. Monetary Policy, Banking, and the Economy Explain how monetary policy affects interest rates in the short run. Relate monetary expansion to inflation in the long run. Identify the two major definitions of money. Describe how interest rates are affected by political pressure. Revised 9/30/10 Page 9 of 12

10 Attaining Economic Stability The Cost of Economic Instability Explain the economic costs of instability. Describe the social costs of instability. Macroeconomic Equilibrium Explain the concept of aggregate supply. Describe the importance of aggregate demand. Examine the nature of macroeconomic equilibrium. Stabilization Policies Explain the operations and impact of fiscal policy. Distinguish between supply-side economics and fiscal policy. State the basic assumptions of monetary policy. Economics and Politics Explain why monetary policy sometimes conflicts with other economic policies. Recognize that economists have differing views. Understand the way that politics and economics interact. The Global Economy Comparative Economic Systems The Spectrum of Economic Systems Explain the advantages and disadvantages of capitalism. Describe the differences among the doctrines of socialism, capitalism, and communism. Compare the features of communism to other types of economic systems. The Rise and Fall of Communism Explain the rise of the Soviet economy under Lenin and Stalin. Describe the complexities of a centrally planned economy. Understand the forces that brought about the collapse of communism as an economic system. The Transition to Capitalism List four problems encountered when an economy makes the transition to capitalism. Recognize the major countries and regions that are making the transition to capitalism. The Various Faces of Capitalism Explain the factors that encouraged economic growth in Japan. Rank the "Asian Tigers" according to per capita GNP. Describe Sweden's retreat from socialism. Revised 9/30/10 Page 10 of 12

11 International Trade Why Nations Trade Analyze the locations of resources and evaluate the significance of these locations. Explain the concepts of absolute and comparative advantage and apply the concept of comparative advantage to explain why and how countries trade. Analyze the impact of U.S. imports and exports on the United States and its trading partners. Trade Barriers and Agreements Define various types of trade barriers. Compare the effects of free trade and trade barriers on economic activities. Understand arguments in favor of protectionism. Evaluate the benefits and costs of participation in international trade agreements. Explain the role of multinationals in the global market. Measuring Trade Analyze how changes in exchange rates of world currencies affect international trade. Describe the effect of various exchange rate systems. Analyze the effects of changes in exchange rates on the balance of trade. Economic Development and Transition Levels of Development Understand what is meant by developed and less developed countries. Identify the tools used to measure levels of development. Describe the characteristics of developed nations and less developed countries. Understand how levels of development are ranked. Issues in Development Identify the causes and effects of rapid population growth. Describe the effects of the unequal distribution of the factors of production. Understand the importance of human capital to development. Analyze how political factors and debt are obstacles to development. Financing Development Understand the role investment plays in development. Identify the purposes of foreign aid. Describe the functions of various international economic institutions. Revised 9/30/10 Page 11 of 12

12 Transitions to Free Enterprise Identify some important steps in moving from a centrally planned economy toward a free market economy. Describe the political and economic changes that have taken place in Russia in recent decades. Describe the actions that China's communist government has taken to introduce free market reforms to China. Global Economic Challenges The Global Demand for Resources Explain Malthus's views on population growth. Explain the importance of conserving nonrenewable resources. List ways that people are using renewable energy resources to conserve scarce resources. Identify other resources endangered by population growth. Economic Incentives and Resources Explain how the price system helps conserve water, natural gas, and oil. Describe government efforts to limit pollution. State the importance of using resources wisely. Applying the Economic Way of Thinking Describe the reasoned approach to economic decision making. Understand how our market economy will be able to cope with the future. Revised 9/30/10 Page 12 of 12