Term
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Definition
Results from the unlimited wants of society in a world of limited resources. |
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Definition
| The limited resources in demand of society (land, labor, capital and entrepreneurs) |
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Term
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Definition
| natural resources not created by humans. |
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Term
| Capital vs. Financial Capital |
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Definition
| Tools, equipment and facilities needed to produce goods. Financial capital is the money needed to buy these items. |
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Definition
| People using their efforts, abilities and skills to produce goods and services. |
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Definition
| risk takers in search of profit who start businesses. |
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Definition
| The study of how people satisfy seemingly unlimited competing wants with the use of scarce resources. |
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Term
| Three Basic Economic questions |
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Definition
| What should be produced, how it should be produced, and for whom it should be produced? |
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Term
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Definition
| The ability of commodity to satisfy needs or wants. |
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Term
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Definition
| An abundance of a subject (money, power, etc.) |
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Definition
| Amount of money, goods or services considered fair equivalent for something else. |
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Definition
| A policy of letting economics take care of themselves with little or no interference from people. |
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Definition
| When an item is chosen over another to promote maximum benefit with minimum cost. |
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Definition
| The item given up in a trade-off. |
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Term
| Production Possibilities Frontier |
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Definition
| A diagram that shows combinations of goods and services an economy can produce when all productive resources are fully employed. |
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Term
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Definition
| Needs are items necessarily to basic survival while wants are expansions on needs that aren't necessary but improve standard of living. |
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Definition
| Those who use their skills and effort to produce goods or services for consumption by the consumer. |
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Term
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Definition
| People who use the goods and services created by producers. |
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Term
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Definition
| Dividing a labor task into smaller tasks among workers allowing the workers to perfect their craft. |
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Term
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Definition
| A system of production in which the means of production are privately owned and operated for profit. |
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Term
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Definition
| Collection of institutions, laws and human motivations collectively providing the framework for economy. |
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Definition
| Economic system that is governed by the satisfaction of the questions "what," "how," and "for whom". |
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Term
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Definition
| An economic system in which decisions are made by political authorities rather than influenced by market forces. |
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Term
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Definition
| An economy in which decisions are made in response to market forces. |
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Term
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Definition
| An economy primarily determined by individuals and market forces, with limited framework provided by the government. |
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Term
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Definition
| philosopher who wrote "An Inquiry Into the Wealth of Nations," in which he introduced the idea of the "invisible hand" which became the basis of capitalism. |
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Term
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Definition
| philosopher responsible for laying the foundations for communism and socialism. |
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Term
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Definition
| a socialist economic theory promoting the elimination of private property in an attempt to have a classless society in which all are equal. |
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Definition
| economic system that developed after the collapse of the feudal system in which heavy government control was used in order to increase the power and wealth of a nation. |
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Term
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Definition
| quantity of goods needed by consumers at various prices. |
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Term
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Definition
| quantity of goods needed by consumers at a specific price. |
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Term
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Definition
| the higher the price of the product, the less the consumer will demand. |
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Term
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Definition
| a social arrangement between producers and consumers to conduct voluntary exchange of goods and services. |
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Term
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Definition
| utility obtained by consuming or using one more unit of that good. |
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Term
| Diminishing marginal utility |
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Definition
| law of economics stating that as a person increases consumption of a product, while keeping consumption of other products constant, there is a decline in the marginal (additional) utility that person derives from consuming each additional unit of that product. |
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Term
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Definition
| complete satisfaction obtained from all units of a good. |
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Term
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Definition
| the change in demand for a product caused by the impact of a change in its price affects the spending power of the consumer. |
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Term
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Definition
| factors other than price that determine the total demand of a product. Also known as demand shifters. |
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Term
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Definition
| similar products that people will buy if the price of a product goes up |
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Term
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Definition
| a good which is consumed with another good. |
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Term
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Definition
| the percentage change in quantity demand based upon a change in price |
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Term
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Definition
| the amount of money that a company receives from its activities in a given period. |
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Term
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Definition
| the making of gain in business activity for the benefit of the owners of the business. |
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Term
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Definition
| amount of a product that would be offered for sale at all possible prices that could prevail in the market. |
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Term
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Definition
| suppliers will normally offer more for sale at high prices and less at lower prices |
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Term
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Definition
| listing of the various quantities of a particular product supplied at all possible prices in the market. |
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Term
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Definition
| graph showing the various quantities supplied at each and every price that might prevail in the market. |
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Term
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Definition
| amount producers bring into the market at any given price. |
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Term
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Definition
| the point where supply and demand are equal. |
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Term
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Definition
| occurs when supply exceeds demand. |
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Term
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Definition
| occurs when demand exceeds supply. |
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Term
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Definition
| factors other than price that determine supply. |
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Term
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Definition
| resources used in production. |
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Term
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Definition
| broad concept that deals with knowledge and usage of tools and crafts, and how they affect the ability to control an environment. |
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Term
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Definition
| a government payment to a company or individual to encourage a certain economic activity. |
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Term
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Definition
| a fee charged by a government on a product, income, or activity. |
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Definition
| total output produced by a firm. |
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Term
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Definition
| additional output due to an extra variable of input. |
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Term
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Definition
| as the variable rate increases, the output increases at a diminishing rate. |
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Term
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Definition
| changes when the business rate of an operation or output changes. |
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Term
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Definition
| a cost that does not vary depending on production or sales levels. |
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Term
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Definition
| the costs of producing one more unit of output. |
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Term
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Definition
| sum of the fixed and variable costs. |
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Term
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Definition
| the amount of output per unit of input. |
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Term
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Definition
| a business owned by one person. |
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Term
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Definition
| a business owned by two or more people. |
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Term
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Definition
| a legal entity that is entirely separate from those who own it. |
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Term
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Definition
| legally being personally responsible for all debts or lawsuits incurred in a business. |
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Term
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Definition
| partnership that is made of one single general partner, and a number of limited partners. |
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Term
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Definition
| those who hold part ownership in a corporation. |
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Term
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Definition
| shares of ownership in a company. |
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Term
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Definition
| group of people who govern a corporation. |
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Term
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Definition
| earnings distributed to shareholders. |
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Term
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Definition
| the nature and degree of competition between firms operating in the same industry. |
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Term
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Definition
| places where goods and services are exchanged. |
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Term
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Definition
| characterized by a large number of small firms that cannot control the market. This is an ideal market structure that does not exist in our world. |
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Term
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Definition
| characterized by a few large sellers who control the market and sell similar products. |
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Term
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Definition
| characterized by one seller who controls the market. No competition exists. |
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Term
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Definition
| characterized by a number of sellers who produce different products. |
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Term
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Definition
| organization for employees to collectively bargain over wages and benefits. |
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Term
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Definition
| process between employees and employers to settle grievances. |
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Term
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Definition
| a refusal to work until grievances by employees have been addressed. |
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Term
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Definition
| tactic of demonstrating with signs outside a factory or business in order to publicize a strike. |
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Term
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Definition
| Refusal to buy a company's product. |
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Term
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Definition
| anything widely accepted for the purpose of exchange. |
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Term
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Definition
| an item accepted for exchange. |
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Term
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Definition
| common measurement in which values are expressed. |
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Term
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Definition
| value maintained over time. |
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Term
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Definition
| financial plan for managing money. |
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Term
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Definition
| expenses that change or fluctuate. |
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Term
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Definition
| set expenses that don't change. |
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Term
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Definition
| credit offered by retailers. |
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Term
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Definition
| offers the ability to extend payment for different items from different vendors. Usually offered through a bank or other finance company through a credit card. |
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Term
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Definition
| credit arranged through a bank or finance company that is not "secured" meaning, nothing is offered as collateral. |
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Term
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Definition
| promise of property to a lender to secure repayment of a loan. |
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Term
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Definition
| amount paid by a borrower to a lender in order to compensate for the use of assets. |
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Term
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Definition
| initial amount borrowed on a loan that doesn't include interest. |
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Term
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Definition
| interest which is always based upon the original amount of the loan; P x I x N. |
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Term
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Definition
| interest, which is determined by the original amount of the loan, in addition to the interest accrued. |
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Term
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Definition
| where you loan your money to someone else for a share of the profits they receive from the way they use the money. |
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Term
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Definition
| where you loan your money to someone else for an amount called interest. |
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Term
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Definition
| where you loan your money to someone else for an amount called interest. |
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Term
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Definition
| time deposit offered to consumers by banks and other financial institutions, in which the bank holds the money for a specified period of time, at a fixed interest rate, until withdrawn at maturity. Consumer is paid the money plus interest accrued. |
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Term
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Definition
| imposes the same percentage of tax on everyone. |
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Term
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Definition
| imposes a higher rate of taxation on those with lower incomes. |
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Term
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Definition
| the rate of taxation increases with an increase in income. |
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Term
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Definition
| the role of a bank is to serve as a middleman between savers and investors. |
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Term
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Definition
| intermediary between savers and lenders. |
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Term
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Definition
| similar to banks, but rather are owned by depositors or members. |
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Term
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Definition
| describes how easily or quickly an asset can be turned into cash. |
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Definition
| income left over after paying for expenses. |
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Term
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Definition
| legal maximum that can be charged for a good. |
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Term
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Definition
| legal minimum that can be charged for a good. |
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Term
| The Federal Reserve (FED) |
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Definition
| banking system owned and operated by the US government. |
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Term
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Definition
| tool used by the government in order to influence Aggregate Demand. This includes how the government's spending policies influence economic conditions. |
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Term
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Definition
| tool used by the FED to influence availability and cost of credit, through increasing or decreasing the money supply. |
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Term
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Definition
| total demand for all products in an economy. |
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Term
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Definition
| rise in the level of prices for goods and services in an economy over time; too few goods, chasing too many dollars. |
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Term
| Expansionary Fiscal Policy |
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Definition
| spending policy used by the government in order to increase aggregate demand. |
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Term
| Contractionary Fiscal Policy |
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Definition
| spending policy used by the government in order to decrease aggregate demand. |
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Term
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Definition
| side effects that either benefit of harm a third party. |
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Term
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Definition
| payments made by the government in which they receive nothing in return |
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Term
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Definition
| goods consumed by everyone in society that are provided by the government. |
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Term
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Definition
| laws created to regulate competition especially concerning the limitations of monopolies. |
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Term
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Definition
| division of the executive branch primarily responsible for assembling the budget under the president's guidelines. |
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Term
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Definition
| total value of all final goods and services produced during a particular year or period within the country. Different from GNP in that it measures goods produced only domestically, within the country's borders. |
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Term
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Definition
| Gross National Product. Different from GDP in that it measures goods produced by all of a country's enterprises whether domestically, or abroad. |
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Term
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Definition
| point at which recession ends and expansion begins. |
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Term
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Definition
| sustained period in which real GDP is rising. |
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Term
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Definition
| point at which expansion ends and recession begins. |
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Term
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Definition
| sustained period in which real GDP is falling, also known as contraction. |
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Term
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Definition
| a prolonged and severe recession. |
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Term
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Definition
Signal Economic activity:
business failures
average number of hours worked
residential building contracts
orders for durable goods |
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Term
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Definition
Follow changes in cycle:
consumer installment credit
retail store sales
personal income
manufacturer's inventories
bank interest rates on business loans |
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Term
| Reasons for Market Failure |
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Definition
Inadequate Competition:
Inadequate Information
Resource Immobility
Externalities
Public Goods |
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Term
| Market Failure: Inadequate Competition |
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Definition
| monopolies force consumers to pay whatever the monopoly wants to charge for a product. Monopolies can also cause shortages if they want to, they can try and influence politics by bargaining with their resources, etc. When companies/corporations begin to merger, this decreases competition as well because there are no longer as many companies to compete with one another as there once were. |
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Term
| Market Failure: Inadequate Information |
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Definition
| a lot of times it is difficult for buyers and sellers to get the information they need to best allocate resources. |
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Term
| Market Failure: Resource Immobility |
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Definition
| sometimes resources are not free to move between markets. If a large auto plant closes in a small town, the workers cannot just pick up and move somewhere else to get a job. They also might not be skilled to enter another type of industry. This makes them immobile as a resource. This means that resources are not being used as efficiently as possible. |
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Term
| Market Failure: Externalities |
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Definition
| an economic side effect that either benefits or harms a third party not directly involved in the activity. Negative externalities are side effects that harm a third party. Let's say the government decides to expand a highway. The people living near that highway face construction traffic, noise and pollution from machinery - this is a negative externality. A positive externality is when a third party benefits from an economic action. For example, when the highway is built, more people might be able to get to work quicker, etc. |
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Term
| Market Failure: Public Goods |
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Definition
| those products such as highways, flood control, national defense and police and fire protection that are consumed by all of society. Businesses generally do not provide these services. So, the government steps in and provides them using tax dollars. |
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Definition
| the rate at which the currency for one nation is exchanged for the currency of another. |
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Term
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Definition
| market for the buying and selling of national currencies. |
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Term
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Definition
| reliance on other nations to obtain the goods and services needed. |
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Term
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Definition
| when the demand for currency increases, causing the value of that currency to increase as well. |
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Term
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Definition
| when the demand for currency decreases, causing the value of that currency to decrease as well. |
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Term
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Definition
| goods and services brought into a country, or state, from another nation or state. |
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Term
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Definition
| goods and services sold to other nations and states. |
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Term
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Definition
| the idea that a nation's industries need to be protected from foreign trade. |
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Term
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Definition
| taxes placed on imports to increase their prices in the country's market. |
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Term
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Definition
| limit on how many of a foreign good can be brought into the country. |
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Term
| Voluntary Trade Restrictions |
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Definition
| voluntary trade restrictions limit the number of a good that can be imported. This is done through a binding agreement between the U.S and another nation, and does not require legislation. |
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Term
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Definition
| law cutting off imports and exports to or from a specific country |
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Term
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Definition
| Organization of Petroleum Exporting Countries. |
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Term
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Definition
| North American Free Trade Agreement. This is an agreement between Canada, the U.S and Mexico to reduce tariffs to zero. |
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Term
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Definition
| when a country exports more than they import. |
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Term
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Definition
| when a country imports more than they export. |
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Term
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Definition
| World Trade organization that regulates trade and tariffs worldwide. |
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