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economic terms
economic terms
35
Economics
12th Grade
01/15/2006

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Term
aggregate demand
Definition
the amount of goods and services in the economy that will be purchased at all possible price levels
Term
automatic stabilizer
Definition
a government program that changes automatically depending on GDP and a person's income
Term
board of governors
Definition
the seven-member board that oversees the Federal Reserve System
Term
budget deficit
Definition
a situation in which the government spends more than it takes in
Term
budget surplus
Definition
a situation in which the government takes in more than it spends
Term
check clearing
Definition
the process by which the banks record whose account gives up money and whose account receives money when a customer writes a check
Term
corporation
Definition
a legal entity owned by individual stockholders
Term
cost push theory
Definition
theory that inflation occurs when producers raise prices to meet increased costs
Term
cyclical unemployment
Definition
unemployment that rises during economic downturns and falls when the economy improves
Term
deflation
Definition
a sustained drop in the price level
Term
demand pull theory
Definition
theory that inflation occurs when demand for goods and services exceeds existing supplies
Term
demand side economics
Definition
a school of economics that believes government spending and tax cuts help an economy by raising demand
Term
discount rate
Definition
rate the Federal Reserve charges for loan to commercial banks
Term
elastic
Definition
describes demand that is very sensitive to change
Term
excess reserves
Definition
in banking, reserves of cash more than the required amount
Term
factor payments
Definition
the income people receive for supplying factors of production: land, labor, or capital
Term
fiscal policy
Definition
the use of government spending and revenue collection to influence the economy
Term
inflation
Definition
a general increase in prices
Term
market basket
Definition
a representative collection of goods and services
Term
medicaid
Definition
entitlement program that benefits low-income families, some people with disabilities, and elderly people in nursing homes
Term
medicare
Definition
a national health insurance program that helps pay for health care for people over age 65 or who have certain disabilities
Term
mixed economy
Definition
economic system that combines the free market with limited government involvement
Term
monetary policy
Definition
the actions of the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy
Term
national debt
Definition
all the money the federal government owes to bondholders
Term
open market operations
Definition
the buying and selling of government securities to alter the supply of money
Term
opportunity cost
Definition
the most desirable alternative given up as the result of a decision
Term
partnership
Definition
a business organization owned by two or more persons who agree on a specific division of responsibilities and profits
Term
poverty rate
Definition
the percentage of people who live in households with income below the official poverty line
Term
progressive tax
Definition
a tax for which the percent of income paid in taxes increases as income increases
Term
quantity theory
Definition
theory that too much money in the economy causes inflation
Term
regressive tax
Definition
a tax for which the percent of income paid in taxes decreases as income increases
Term
sole proprietorship
Definition
a business owned and managed by a single individual
Term
structural unemployment
Definition
unemployment that occurs when workers' skills do not match the jobs that are available
Term
tariff
Definition
a tax on imported goods
Term
tight money policy
Definition
monetary policy that reduces the money supply
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