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Econ Unit 1
Vocab Flash Cards
39
Economics
Undergraduate 1
11/30/2007

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Term
supply schedule
Definition
quantity measured on horizontal axis and price on vertical axis, supply curve is straight line sloping upward to the right. demonstrates that as the price of goods rises, more is offered for sale.
Term
demand schedule
Definition
as the price of a good rises, consumers buy less of it (negative slope)
Term
unemployment rate
Definition
the number of workers who are involuntarily out of work as a percentage of the labor force
Term
Gross Domestic Product (GDP)
Definition
dollar value of all final goods and services produced in an economy in one year
Term
inflation
Definition
a rising average price level
Term
deflation
Definition
a declining price level
Term
real GDP
Definition
GDP minus inflation
Term
recession
Definition
a period of two or more successive quarters of decline in real GDP (usually involves a rise in unemployment)
Term
stagflation
Definition
the simultaneous existence of unemployment and inflation
Term
production possibilities curve (PPC)
Definition
represents all possible production mixes for the economy. the slope represents the opportunity cost of one commodity in terms of another
Term
marginal rate of transformation (MRT)
Definition
the ratio at which one good can be transformed into the other (i.e. the slope of the PPC) in terms of resource conversion
Term
pure capitalism
Definition
means of production are privately owned and the coordination of economic activity is done through markets and prices
Term
communism
Definition
means of production are owned by the state and a state planning authority coordinates economic activity
Term
democratic socialism
Definition
a combination of the most attractive features of both capitalism and communism
Term
mixed economy
Definition
a mixed system of private and public ownership of resources, governed somewhat by markets but modified by government intervention
Term
capital goods
Definition
structures, machinery and equipment
Term
primary factors of production
Definition

CELL

(C)apital

(E)nterprise

(L)and

(L)abor 

Term
multi-stage production
Definition
a process where each firm performs only a part of the process and sells its output to another firm for further fabrication
Term
firms
Definition
the orginizational unit within which each economic activity is conducted
Term
sole proprietorship
Definition
a business owned by one person who is subject to unlimited liability
Term
partnership
Definition
a business owned and operated by two or more people--subject to unlimited liability
Term
unlimited liability
Definition
the owner of an indebted business c an lose not only the assets of the business, but personal assets as well, to creditors
Term
corporation
Definition
a legal entity separate from the people who own it. it is able to raise capital funds, produce, distribute, and sell goods and services; incur debt, sue, or be sued, and conduct business affairs
Term
stocks or shares
Definition
certificates used to raise initial capital through their sale
Term
dividends
Definition
part of a corporations profits which are distributed to the stockholders of the company
Term
retained earnings
Definition
the part of a compnay's profits that are withheld in anticipation of future investments
Term
Bond
Definition
an IOU issued by a company to raise additional funds, owners receive interest
Term
limited liability
Definition
risk extends only to the number of shares you own
Term
labor productivity
Definition
output per worker
Term
property tax
Definition
a tax levied as a percentage of the assessed value of a person's property
Term
direct tax
Definition
taxes that are imposed on a factor of production (such as the personal income tax and the corporate profit tax)
Term
indirect taxes
Definition
taxes levied on commodities and are then shifted to the buyer or seller
Term
progressive tax
Definition
a tax system where the percentage or proportion of income paid in taxes rises with income
Term
proportional tax
Definition
(flat tax) where the percentage of income paid in taxes remains constant as income rises
Term
regressive tax
Definition
when the proportion of income paid in taxes declines as income rises
Term
factors of demand
Definition

INSECT

 

1. change in (I)ncome

2. change in (N)umber of consumers

3. change in price of (S)ubstitute

4. (E)xpectation of price shift

5. change in price of (C)omplement

6. change in (T)aste

 

think: income, number, substitute, expectation, complement, taste (insect!)  

Term
factors of supply
Definition

SORT

 

 

1. number of (S)uppliers

2. change in price of (O)ther goods

3. change in price of (R)esources

4. change in (T)echnology 

 

 

Term
equilibrium price
Definition
price that equates the quantity supplied with the quantity demanded
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