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BYUI FDAMF 101 - FDAMF Test 2 flashcards

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FDAMF Test 2Alexis De Tocqueville French aristocratcomes to US to understand democracyAmerica great because it is good, cease to be good, cease to be greatVertical checks Bill of RightsFederalism: levels of governmentDemocracyHorizontal check division of power into branches-judicial, legislative, executiveSmall Reoublic Small Nation,big FactionLarge Republic Big Nation,small Factioninterest balance against interest many little factions surrounding Nation Adam Smith Scottish philosopher late 18th centuryDiscoveries:-how wealth is created-how economic activity is coordinatedWealth of Nations written by adam smith?the Miracle of exchange two people make an exhangeboth are happy and both grew along with economysecret to wealth specialization and trade Specialization declining marginal cost-the more you produce of something the less it costs you to produce each unitTrade means declining marginal utility- the more you consume of something, the less value you get from it -donut lawSacred Graph-understand it-most important economic toolDemand Curve-slopes downward-at higher price, people demand lessSupply Curve-slopes upward-at higher price, people supply moreEquilibrium Price and Quantity-Price is agreement between producers and consumers.-we create them (the price)what happens as demand increases?-price goes upwhat happens if supply increases?-Price goes downIf there are no shortages in a free market then why do we have them? Government-imposed price controls-price floor-price ceilingPrice ceiling=shortages-producers want to produce less-consumers want to consume morePrice floor=surpluses-suppliers want to supply more, demanders demand lessAndrew Carnegie Scottish immigrantby saving and investing he became wealthiest businessman ever-gave all his money awayfallacy #1: self interest= selfishness selfishness:-helping your self at the expense of others (always bad)self-interest:-pursing your own interest (can be good or bad ex. marriage)Fallacy #2 Market is a system of nasty competition and no cooperation competition remains where it should: between businesses-no competition=monopoly-competition a check on powercooperation remain where it should:-between consumer and producerFallacy #3 profits = greed Greed: excessive and unhealthy lust for moneyProfits not necessarily Greed because:- incentive/signal to produce what we need- value neutral (Used for both good and bad) ex. Aldi's grocery cart trickFallacy #4: selfishness, ruthlessness, greed come from market system -self-interest, profit-seeking, competition are inevitable- selfish, ruthless, greedy people in all economic systems-Market can channel even bad desires to good endsMax Weber -German, early 20th century-Turned Mars on his headprotestant ethic=deferred gratification=saving=capitalAntebellum economy (1800-1860) -Market revolution-infrastructure (turnpikes, canals, railroadsGilded Age Industrial leap (1869-1900)-industrialization-USA becomes leading economic powerFactors driving US economic power Free Market systemFavorable cultureNatural resourceswhats the problem with the "Vital Center" Communism=100% gov. (left)Nazism=100% gov. (right)Liberalism= halfway in between 100% and 100% gov.. so it doesn't fit (center)Free Market (also called free enterprise, or capitalist)-preserves agency-very efficientCommand Economy (Also called planned, or socialist economy)-based on force-inefficientGovernments role in market economy 1. preserve rule of law2. correct market


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