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FIRST QUARTER ASSESSMENT REVIEW
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Microeconomics THE STUDY OF THE BEHAVIOR OF INDIVIDUAL PLAYERS—SUCH AS INDIVIDUALS, FAMILIES, AND BUSINESSES—IN AN ECONOMY
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Macroeconomics THE STUDY OF THE BEHAVIOR OF THE ECONOMY AS A WHOLE; CONCERNED WITH LARGE-SCALE ECONOMIC ACTIVITY
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Consumer PERSON WHO BUYS GOODS OR SERVICES FOR PERSONAL USE
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Producer PERSON WHO MAKES GOODS OR PROVIDES SERVICES
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Need PERSON WHO MAKES GOODS OR PROVIDES SERVICES
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Want PERSON WHO MAKES GOODS OR PROVIDES SERVICES
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Production Possibility Curve (Frontier) A GRAPH USD TO ISLLUSTRATE THE IMPACT OF SCARCITY ON AN ECONOMY; FOUR ASSUMPTIONS ARE MADE IN PPC’S: 1.All resources are fixed. 2.All resources are fully employed. 3.Technology is fixed. 4.You can only produce two goods.
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Underutilization THE CONDITION IN WHICH ECONOMIC RESOURCES ARE NOT BEING USED TO THEIR FULL POTENTIAL, RESULTING IN FEWER GOODS AND SERVICES
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Efficiency THE CONDITION IN WHICH ECONOMIC RESOURCES ARE USED TO PRODUCE THE MAXIMUM AMOUNT OF GOODS AND SERVICES
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Opportunity Cost THE VALUE OF SOMETHING THAT IS GIVEN UP BY CHOOSING ONE ALTERNATIVE OVER ANOTHER
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Trade-off THE ALTERNATIVE SOMEONE GIVES UP WHEN MAKING AN ECONOMIC CHOICE
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Cost-benefit Analysis THE PRACTICE OF EXAMINING THE COSTS AND EXPECTED BENEFITS OF A CHOICE AS AN AID TO DECISION MAKING
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Real Capital ALL THE RESOURCES PEOPLE MAKE AND USE TO PRODUCE AND DISTRIBUTE GOODS AND SERVICES
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Contract A FORMAL, LEGALLY BINDING AGREEMENT
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Future A contract to buy or sell a stock on a specified future date at a preset price
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Option A contract giving the investor the right, but not the obligation, to buy or sell stock at a future date at a preset price
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National Association of Securities Dealers Automated Quotation System– 1.Most often referred to as 2.Sometimes called over-the-counter stocks 3.The most volatile exchange b/c it features may hi-tech, insurance, and medical stocks NASDAQ
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DOW JONES INDUSTRIAL AVERAGE- AVERAGE OF 30 STOCKS IN THE MARKET The DJIA is an index of “blue chip” U.S. stocks. It is called an “average” because it originally was computed by adding up stock prices and dividing by the number of stocks. The 30 companies that make up the DJIA are all major players in their industries; these stocks are widely held by individuals and institutional investors. These 30 stocks represent about 1/5 of the $8 trillion-plus market value of all U.S. stocks. http://nyjobsource.com/djia.html
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Corporate/Junk Bonds Issued by companies Usually for business expansion Highest risk
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LESS DEVELOPED COUNTRIES (LDCs)- These countries have a lower GDP, less well developed industry, and a lower standard of living Ex. Many African, South American, and Eastern European countries
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Six Determinant used to determine the level of development DEVELOPED – TRANSITIONAL (DEVELOPING) – LDC 1.PER CAPITA GDP 2.HEALTH 3.EDUCATION 4.ENERGY USE 5.CONSUMPTION OF GOODS AND SERVICES 6.LABOR FORCE
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GDP THE MARKET VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED WITHIN A NATION IN A GIVEN TIME
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PER CAPITA GDP REAL GDP DIVIDED BY POPULATION
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FOUR CATEGORIES FOR FACTORS OF PRODUCTION: 1.LAND 2. LABOR 3.CAPITAL 4.ENTREPRENEURSHIP
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Who is Adam Smith? (What did he write? What did he believe?) Wrote The Wealth of Nations; reasoned that people behave in ways that satisfy their economic self-interest therefore, there is an “invisible hand” that guides the economy and the government should not interfere.
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Who determines stock prices? Consumers looking to purchase the stock determine the stock price (just like supply and demand with products)
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Why do some people make risky investments? Typically, the riskier the investment, the larger the opportunity for gain.
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PLEASE CHANGE THE QUESTION TO: How would an investor maximize returns and limit risks? The investor would want to diversify their portfolio
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