Term
| GDP (def. with 3 requirements) |
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Definition
| • Total market ($) value of all final goods and services produced within a nation’s borders in a given time period. |
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Term
| Output-expenditure model (formula) |
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Definition
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Term
| Personal Consumption Expenditures (C) |
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Definition
| • Consumer purchases – on durable/nondurable goods and services |
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Term
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Definition
| • Business spending – new construction, purchases of capital goods, and increase or decrease of inventory |
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Term
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Definition
| • Spending by federal, state, and local governments on goods and services |
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Term
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Definition
| • Total exports – Total Imports |
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Term
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Definition
• Normal GDP – expressed in current prices
• Real GDP – Adjusted for price changes |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| • Changes in a market's economic system |
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Term
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Definition
• Period of economic growth
• Real GDP rising
• Unemployment is down |
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Term
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Definition
| • Highest point of economic system |
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Term
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Definition
| A period of general economic decline |
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Term
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Definition
| – contraction of six months or longer |
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Term
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Definition
| extended period of high unemployment & limited business activity |
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Term
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Definition
• Bottom point in Economic system
• Point when economic system begins to turn around and grow again |
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Term
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Definition
* Coincident indicators
* Lagging Indicators |
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Term
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Definition
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Term
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Definition
| usually change after GDP has changed |
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Term
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Definition
| % of the civilian labor force without a job and looking |
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Term
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Definition
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Term
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Definition
| unemployed & stopped looking |
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Term
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Definition
a. Temporary, people changing jobs
b. Normal process of jobs being created and destroyed |
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Term
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Definition
| a. Linked to seasonal work |
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Term
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Definition
a. Jobs do not match up well with the skills of those looking for work
b. Usually due to technology |
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Term
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Definition
a. Caused by a part of the business cycle
b. Follows economy |
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Term
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Definition
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Term
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Definition
| o Total demand rises faster than production, creating higher prices |
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Term
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Definition
o Prices are pushed upward by rising production costs
o Wage-price spiral |
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Term
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Definition
| a rapid, uncontrolled rate of inflation in excess of 50% a month… (never in U.S.) |
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Term
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Definition
A general decrease in prices
i. Would hurt business and government |
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Term
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Definition
a. Decreasing value of the dollars & wages
b. Citizens on a fixed income hit the hardest
c. Increasing interest rates – lenders often raise interest rates when prices rise because of the decreasing value of the dollar
d. Decreasing real returns on savings |
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Term
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Definition
| a. Considered poverty if income falls below Poverty Threshold (lowest income needed for basic standard of living) |
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Term
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Definition
| % of people living below the poverty threshold |
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Term
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Definition
| The further we get away from the diagonal line (which is equal income), the more uneven the distribution is of income and the opposite is true as well |
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Term
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Definition
i. Shares of ownership
ii. Make $ through dividends or selling |
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Term
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Definition
| means through which goods and services can be exchanged |
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Term
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Definition
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Term
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Definition
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Term
| Physical properties of Money |
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Definition
• Durability – Needs to be sturdy & long-lasting
• Portability – Needs to be small, light, and easy to carry.
• Divisibility – Needs to have endless ways to be divided.
• Uniformity – Needs to be uniform and recognizable, with unique characteristics. |
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Term
| Economic Properties of Money |
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Definition
• Stability of Value – Money purchasing power, or value, should be relatively stable
• Scarcity – Money must be scarce to have and value
• Acceptability – People must except that money is a valid medium of exchange |
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Term
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Definition
| • Has value based on what it is made of |
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Term
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Definition
| • Money that can be exchanged for something else of value |
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Term
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Definition
| • Has value only because the government has issued a Fiat, or order, saying this. |
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Term
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Definition
| , demand deposits, and other checkable deposits |
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Term
| Perfect Competition (characteristics) |
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Definition
i. Many buyers & Sellers
ii. Identical product (perfect Substitutes)
iii. Perfectly informed buyers/sellers
iv. Free entry & exit
v. Independent buyers & sellers, no control over price |
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Term
| Pure Monopoly (characteristics) |
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Definition
i. Single seller
ii. Unique product, no close substitutes
iii. Barriers to entry (restricted/regulated)
iv. Complete control over price |
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Term
| Oligopoly (characteristics) |
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Definition
i. Few Sellers
1. (2-4 largest control over 70%)
ii. Standardized or differentiated
iii. Barriers to entry
1. Cost
iv. Some price control |
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Term
| Monopolistic competition (characteristics) |
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Definition
i. Many firms
ii. Differentiated product
iii. Few Barriers
iv. Slight price control |
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Term
| Elasticity of demand (definition & formulas) |
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Definition
a. Responsiveness by consumers
b. It measures the % change in quantity demanded that results from a % change in price |
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Term
| Price Floor (def, graph, examples) |
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Definition
| Minimum legal, price helps producers…ex. Agriculture) |
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Term
| Price ceiling (def, graph, examples) |
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Definition
| Max Legal Price, helps consumer… ex. Rent controls, WWII) |
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Term
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Definition
| a situation that exists when there are not enough resources to meet human wants. |
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Term
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Definition
| the study of how individuals and societies satisfy their unlimited wants with limited resources. |
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Term
| Consumer tastes/preferences demand determinant |
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Definition
1. Income
2. Tastes/Preferences
3. Consumer Expectations
4. Market Size/ # Buyers
5. Complementary Goods
6. Substitute Goods |
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Term
| Market size (# buyers) demand determinant |
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Definition
If # of buyers increases, then the Demand Increases
If # of Buyers decreases, then the Demand Decreases |
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Term
| Income demand determinant (normal & inferior) |
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Definition
Normal Goods:
When income rises, demand increases
When income falls, demand decreases
Inferior Good:
When income rises, demand decreases
When Income falls, Demand increases |
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Term
| Related goods demand determinant (subs & comps) |
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Definition
PB & J:
If Price of one rises, demand for the other decreases
If price of one falls, the demand for the other increases
Coke and Pepsi:
If price of one rises, demand for other increases.
If price of on falls, demand for other decreases. |
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Term
| Consumer expectations demand determinant |
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Definition
If future price is expected to rise, current, demand increases.
If the future price is expected to fall, current demand decreases. |
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Term
| Input cost supply determinant |
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Definition
1. Input Costs
2. Labor Productivity
3. Technology
4. Government Action
5. Producer Expectations
6. Number of Producers |
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Term
| Government action supply determinant |
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Definition
a. If taxes increase, supply decreases (excise taxes)
b. With a subsidy (reverse tax), supply increases |
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Term
| Technology supply determinant |
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Definition
| a. Technology increases supply |
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Term
| Labor Productivity supply determinant |
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Definition
| a. Increasing productivity increases supply |
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Term
| # Producers supply determinant |
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Definition
a. # of sellers rise, supply increases
b. # of sellers fall, supply decreases |
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Term
| Producer expectations supply determinant |
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Definition
a. If the future price is expected to fall, increase current supply
b. If the future price is expected to rise, decrease current supply |
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Term
| Positive statements/Economics |
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Definition
| A way of describing and explaining economics as it is |
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Term
| Normative Statements/Economics |
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Definition
| A way of describing and explaining what economics behavior ought to be, not what it actually is. |
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Term
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Definition
| the study of the behavior of individual players - such as individuals, families, and businesses - in an economy. |
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Term
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Definition
| The study of the behavior of the economy as a whole; concerned with large-scale economic activity. |
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