Economics Final Exam Review

a stock or document that represents a claim on the income and property of the borrower; CDs, bonds, Treasury bills, mortgages

• bond

• financial system

• financial asset

• portfolio diversification

productive resources that make up the four categories of land, capital, labor, and entrepreneurship

• factors of production

• standard of living

• capitalism

• specialization

economic and political system in which factors of production are collectively owned and directed by the state; theoretically classless society in which every one works for the common good

• socialism

• communism

• liberalism

• capitalism

products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both

• substitutes

• substitution effect

• complements

• income effect

proportional tax on individual income after a specified threshold has been reached

• sin tax

• flat tax

• sales tax

• income tax

formal contract to repay borrowed money and interest on the borrowed money at regular future intervals

• mutual fund

• IRA

• certificate of deposit

• bond

dollar value of all final goods, services, and structures produced within a country’s national borders during a one-year period

• standard of living

• Gross Domestic Product (GDP)

• portfolio diversification

• Social Security

rise in the general level of prices

• subsidy

• elasticity

• socialism

• inflation

that portion of a change in quantity demanded caused by a change in a consumer’s real income when the price of a product changes

• law of demand

• income effect

• substitution effect

• substitution

branch of Treasury Department that collects taxes

• Internal Revenue Service

• United States Treasury

• Department of Finance

• Federal Bureau of Taxes