Chapter 2

Front 1

Economics

Back 1

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.

Front 2

Macroeconomics

Back 2

The part of economics study that looks at the operation of a nation's economy as a whole.

Front 3

Microeconomics

Back 3

The part of economics study that looks at the behavior of people and organizations in particular markets.

Front 4

Resource Development

Back 4

The study of how to increase resources and to create the conditions that will make better use of those resources.

Front 5

Invisible Hand

Back 5

A phrase coined by Adam Smith to describe the processes that turns self-directed gain into social and economic benefits for all.

Front 6

Capitalism

Back 6

An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.

Front 7

State Capitalism

Back 7

A combination of freer markets and some government control.

Front 8

Supply

Back 8

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.

Front 9

Demand

Back 9

The quantity of products that people are willing to buy at different prices at a specific time.

Front 10

Market Price

Back 10

The price determined by supply and demand.

Front 11

Perfect Competition

Back 11

The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.

Front 12

Monopolistic Competition

Back 12

The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.

Front 13

Oligopoly

Back 13

A degree of competition in which just a few sellers dominate the market.

Front 14

Monopoly

Back 14

A degree of competition in which only one seller controls the total supply of a product or service and sets the price.

Front 15

Socialism

Back 15

An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people.

Front 16

Brain Drain

Back 16

The loss of the best and brightest people to other countries.

Front 17

Communism

Back 17

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production.

Front 18

Free-market Economies

Back 18

Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows.

Front 19

Command Economies

Back 19

Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.

Front 20

Mixed Economies

Back 20

Economic systems in which some allocation of resources is made by the market and some by the government.

Front 21

Gross Domestic Product (GDP)

Back 21

The total value of final goods and services produced in a country in a given year.

Front 22

Gross Output (GO)

Back 22

A measure of total sales volume at all stages of production.

Front 23

Unemployment Rate

Back 23

The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.

Front 24

Inflation

Back 24

A general rise in the prices of goods and services over time.

Front 25

Disinflation

Back 25

A situation in which price increases are slowing (the inflation rate is declining).

Front 26

Deflation

Back 26

A situation in which prices are declining.

Front 27

Stagflation

Back 27

A situation in which the economy is slowing but prices are going up anyhow.

Front 28

Consumer Price Index (CPI)

Back 28

Monthly statistics that measure the pace of inflation or deflation.

Front 29

Core Inflation

Back 29

CPI minus food and energy costs.

Front 30

Producer Price Index (PPI)

Back 30

An index that measures prices at the wholesale level.

Front 31

Business Cycles

Back 31

The periodic rises and falls that occur in economies over time.

Front 32

Recession

Back 32

Two or more consecutive quarters of decline in the GDP.

Front 33

Depression

Back 33

A severe recession, usually accompanied by deflation.

Front 34

Fiscal Policy

Back 34

The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.

Front 35

National Debt

Back 35

The sum of government deficits over time.

Front 36

Keynesian Economic Theory

Back 36

The theory that a government policy of increasing spending could stimulate the economy in a recession.

Front 37

Monetary Policy

Back 37

The management of the money supply and interest rates by the Federal Reserve.