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51 Cards in this Set

  • Front
  • Back
an organization that provides goods or services to earn profits
the difference between a business's revenues and its expenses
economic system
a nation's system for allocating its resources among its citizens
factors of production
resources used in the production of goods and services- labor, capital, entrepreneurs, physical resources, and information resources
labor (human resources)
the physical and mental capabilities of people as they contribute to economic production
the funds needed to create and operate a business enterprise
an individual who accepts the risks and opportunities involved in creating and operating a new business venture
physical resources
tangible things organizations use in the conduct of business
information resources
data and other information used by business
planned economy
economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions
market economy
economy in which individuals control production and allocation decisions through supply and demand
mechanism for exchange between buyers and sellers of a particular good
input market
market in which firms buy resources from supplier households
output market
market in which firms supply goods and services in response to demand on the part of households
market economy that provides for private ownership of production and encourages entrepreneurship by offering profits as an incentive
mixed market economy
economic system featuring characteristics of both planned and market economies
process of converting government enterprises into privately owned companies
planned economic system in which the government owns and operates only selected major sources of production
the willingness and ability of buyers to purchase a good or service
the willingness and ability of producers to offer a good or service for sale
law of demand
principle that buyers will purchase more of a product as its price drops and less as its price increases
law of supply
principle that producers will offer more of a product for sale as its price rises and less as its price drops
demand and supply schedule
assessment of the relationships between different levels of demand and supply at different price levels
demand curve
graph showing how many units of a product will be demanded at different prices
supply curve
graph showing how many units of a product will be supplied at different prices
market price (equilibrium)
profit maximizing price at which the quantity of goods demanded and the quantity of goods supplied are equal
situation in which quantity supplied exceeds quantity demanded
situation in which quantity demanded exceeds quantity supplied
private enterprise
economic system that allows individuals to pursue their own interests without undue governmental restriction
vying among businesses for the same resources or customers
perfect competition
market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors
market or industry characterized by a handful of generally larde sellers with the power to influence the prices of their products
market or industry in which there is only one producer, which can therefore set the prices of its products
natural monopoly
industry in which one company can most efficiently supply all needed goods or services
business cycle
pattern of short-term ups and downs in an economy
aggregate output
total quantity of goods and services produced by an economic system during a given period
standard of living
total quantity of goods and services that country's citizens can purchase with the currency used in their economic system
gross domestic product (GDP)
total value of all goods and services produced within a given period by a national economy through domestic factors of production
nominal GDP
GDP measured in current dollars or with all components valued at current prices
real GDP
GDP calculated for changes in currency values and price changes
measure of economic growth that compares how much a system produces with the resources needed to produce it
national debt
amount of money that a gov't owes its creditors
condition in an economic system in which the amount of moeny available and the quantity of goods and services produced are growing at about the same rate
occurrence of widespread price increases throughout an economic system
consumer price index
measure of prices of typical products purchased by consumers living in urban areas
level of joblessness among people actively seeking work in an economic system
period during which aggregate output, as measured by real GDP, declines
particularly severe and long-lasting recession
fiscal policies
economic policies that determine how the government collects and spends its revenues
monetary policies
gov't economic policies that determine the size of a nation's monetary supply
stabilization policy
government policy, embracing both fiscal and monetary policies, whose goal is to smooth out fluctuations in output and unemployment and to stabilize prices