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  • Matt Flannery

    Co-founder and CEO of

    Users go to the site to select the persons or family they'd like to fund. Next, they lend $25 to the entrepreneur of their choice. If the borrowers reach their funding goal, the Kiva grants them loans. The borrowers gradually make repayments that are sent back to Kiva which then distributes the money back to the lenders


    The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals


    The part of economics study that looks at the operation of a nation's economy as a whole


    The part of economics study that looks at the behavior of people and organizations in particular markets

    Resource development

    The study of how to increase resources and to create the conditions that will make better use of those resources

    Thomas Malthus

    Lead the writer Thomas Carlyle to call economics "the dismal science"

    neo-Malthusians (followers of Malthus)

    Believe there are too many people in the world and that the solution to property is radical birth control, including forced abortions and sterilization

    Is the population growing more rapidly or slowly?


    The secret to economic development

    "Teach a person to start a fish farm, and he or she will be able to feed a village for a lifetime"

    Adam Smith (father of modern economics)

    Scottish economist; envisioned creating more resources so that everyone could become wealthier. He wrote a book called 'Inquiry into the Nature and Causes of the Wealth of Nations' published in 1776

    Adam Smith's beliefs

    Freedom is vital to the survival of any economy, especially the freedom to own land or property and to keep the profits from working the land or running a business. He also believes people will work harder if they have an incentive for doing so--being rewarded. Due to this the economy will prosper and there will be plenty of food for everyone

    The "invisible hand"

    A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits


    An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit

    Other capitalist economies

    England, Australia, Canada and other industrialized nations

    John Mackey

    CEO of Whole Foods

    John Mackey on capitalism

    He believes that "conscious capitalism" that is, capitalism based on businesses that serve all major stakeholders is the best system in the world

    State Capitalism

    A combination of freer markets and some government control

    The Foundations of Capitalism

    1. The right to own private property
    2. The right to own a business and keep all that business profits
    3. The right to freedom of competition
    4. The right to freedom of choice

    President Franklin Roosevelt Four Additional Freedoms

    1. Freedom of speech and expression
    2. Freedom to worship in your own way
    3. Freedom from want
    4. Freedom from fear

    Free Market

    Decisions about what and how much to produce are made by the market-by buyers and sellers negotiating prices for goods and services


    The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time


    The quantity of products that people are willing to buy at different prices at a specific time

    Market Price

    The price determined by supply and demand

    Economists Four Different Degrees of Competition

    1. Perfect competition
    2. Monopolistic competition
    3. Oligopoly
    4. Monopoly

    Perfect competition

    The degree in competition in which there are many sellers in a market and none is large enough to dictate the price of a product

    Monopolistic competition

    The degree of competition in a large number of sellers produce very similar products that buyers nevertheless perceive as different


    A degree of competition in which just a few sellers dominate the market


    A degree of competition in which only one seller controls the total supply of a product or service and sets the price

    What creates perceived differences?


    Dangers/Negatives about Free Markets

    1. Inequality of wealth (those higher up make more money than those of lower-level jobs
    2. Greed


    An economic system based on the premise that some, if not most basic businesses should be owned by the government so that profits can be more evenly distributed among the people

    Brain drain

    The loss of the best and brightest people to other countries

    Benefits of Socialism

    Social equality; The government takes income from wealthier people, in the form of taxes, and redistributes it to poorer people through various government programs. (ex: Free education through, Free health care and free child care)

    Negatives of Socialism

    1. Takes away from business incentives
    2. Fewer inventions and less innovations


    An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production

    Negative of communism

    The government has no way of knowing what to produce, because the prices don't reflect supply and demand as they do in free markets

    Free-market economies

    Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows

    Command economies

    Economic systems in which the government largely decides what goods and services will be produced, who gets them, and how the economy will grow

    Mixed economies

    Economic systems in which some allocation of resources is made by the market and some by the government

    Gross Domestic Product (GDP)

    The total value of final good and services produced in a country in a given year

    Gross Output (GO)

    A measure of total sales volume at all stages of production

    Unemployment Rate

    The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior 4 weeks


    A general rise in the prices of goods and services over time

    Frictional unemployment

    Those people who have quit there job because they don't like the job, boss, or the working condition and who haven't found a new job

    Structural unemployment

    Refers to unemployment caused by the restructuring of firms or by a mismatch between the skills of job seekers and the requirements of available jobs

    Cyclical unemployment

    Occurs because of a recession or a similar downturn in the business cycle (The most serious form of unemployment)

    Seasonal unemployment

    Occurs when demand for labor varies over the year, as with the harvesting of crops


    A situation in which price increases are slowly (the inflation rate decreases)


    A situation in which prices are declining


    A situation when the economy is slowing but prices are going up anyhow

    Consumer Price Index (CPI)

    Monthly statistics that measure the pace of inflation or deflation

    Core Inflation

    CPI minus the food and energy costs

    Producer Price Index (PPI)

    An index that measures prices at the wholesale level

    Business cycles

    The periodic rises and falls that occur in economies over time


    Two or more consecutive quarters of decline in the GDP


    A severe recession, usually accompanied by inflation

    Economist Joseph Schumpeter's Four Phases of Long-term Business Cycles

    1. Boom
    2. Recession
    3. Depression
    4. Recovery

    Fiscal policy

    The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending

    National debt

    The sum of government deficits over time

    Keynesian economic theory

    The theory that is government policy of increasing spending could stimulate the economy in a recesion

    Monetary Policy

    The management of the money supply and interest rates by the Federal Reserve

    John Maynard Keynes

    Developed the Keynesian theory

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