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87 Cards in this Set
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Aggregate Demand
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A schedule ( or graph) that shows the value of output (real GDP) that would be demanded at different price levels.
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different output at different prices.
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Aggregate Supply
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A schedule (or graph) that shows the value of output(real GDP) that would be produced at different price levels. In the long run, the schedule shows a constant level of real GDP at all price levels, determined by the economy’s productive capacity at full employment. In the short run, the aggregate supply schedule may show different levels of real GDP as the price level changes.
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different output at different prices plus more
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Barter
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Trading a good or service directly for another good or service, without using money or credit.
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trading without money
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Budget Deficit
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Refers to national budgets; occurs when government spending is greater than government income from taxes and tariffs in a given year. A yearly deficit adds to the public debt.
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gov spending is greater than gov income
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Budget Surplus
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Refers to national budgets; occurs when government income is greater than government spending in a given year.
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gov income is more than gov spending
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Business cycles
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Fluctuations in the overall rate of national economic activity with alternating periods of expansion and contraction; these vary in duration and degrees of severity; usually measured by real gross domestic product (GDP).
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economic activities that change over time
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Capital
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Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools, and equipment.
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goods used to produce other goods and services
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Competition
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Attempts by two or more individuals or organizations to acquire the same goods, services, or productive and financial resources. Consumers compete with other consumers for goods and services. Producers compete with other producers for sales to consumers.
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fight for the same good or service...like sports
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Compund Interest
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Interest that is earned not only on the principal but also on the interest already earned.
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interest earned before and after
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Consumer Price Index
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A price index that measures the cost of a fixed basket of consumer goods and services and compares the cost of this basket in one time period with its cost in some base period. Changes in the CPI are used to measure inflation.
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compares a fixed cost in a time period
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Consumer Surplus
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The difference between the price a consumer would be willing to pay for a good or service and what that consumer actually has to pay.
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difference between wht u wanna pay and what u actually pay.
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Cost
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The disadvantages of a particular course of action as measured by bad feeling, dollars, or numbers of items.
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disadvantage from certain actions
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Credit
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The opportunity to borrow money or to receive goods or services in return for a promise to pay later.
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loan. borrow
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Debt
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Money owed to someone else. Also see Debt for individual and National debt.
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money owed
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Deflation
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A sustained decrease in the average price level of all the goods and services produced in the economy.
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prices of goods decrease
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Demand
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A schedule (or graph) showing how many units of a good or service buyers are willing and able to buy at all possible prices during a period of time.
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shows how much society wants to purchase
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Distribution
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The allocation or dividing up of the goods and services a society produces.
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dividing of goods
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Division of Labor
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An arrangement in which workers perform only one or a few steps in a larger production process (as when working on an assembly line).
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workers perform small steps in large production
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Economic Functions of Government
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In a market economy, government agencies establish and maintain a legal system to regulate both commercial and social behavior, promote competition, respond to market failures by providing public goods and adjusting for externalities, redistribute income, and establish macroeconomic stabilization policies. To perform these functions, governments must shift resources from private uses by taxing and/or borrowing.
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shift resources from private uses by taxing.
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Economic growth
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An increase in real output as measured by real GDP or per capita real GDP.
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real output
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Economic Incentives
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Factors that motivate and influence the behavior of individuals and organizations, including firms and government agencies. Prices, profits, and losses are important economic incentives in a market economy.
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factors that motivate and influence behavior of organizations
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Definition of Economics
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The study of how people, firms, and societies choose to use scarce resources.
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how people choose to use resources
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Elasticity
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See Price elasticity of demand, Price elasticity of supply.
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price of demand
price of supply |
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Exports
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Goods and services produced in one nation and sold to consumers in other nations.
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goods in one nation sold to another
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Federal Reserve
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The central bank of the United States. Its main function is controlling the money supply through monetary policy.
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control money supply through monetary policy.
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Fuscal Policy
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Changes in the expenditures or tax revenues of the federal government, undertaken to promote full employment, price stability, and reasonable rates of economic growth.
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changes to promote full employment
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Foreign Exchange Market
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Market where demand for and supply of foreign currencies determines exchange rates
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market whre foreign supply determines exchange rates
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Goods
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Tangible objects that satisfy economic wants.
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things people want
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Gross Domestic Product
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The market value of all final goods and services produced in a country in a calendar year.
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market value of goods produced in a year
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Human Capital
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The health, education, experience, training, and skills of people.
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skills of people
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Hyper Inflation
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A very rapid rise in the overall price level
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rise in price level
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Imports
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Purchases of foreign goods and services; the opposite of Exports.
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opposite of exports
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Incentive
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Any reward or benefit, such as money or good feeling, that motivates choices and behaviors.
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reward that motivates good behavior
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Inflation
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A rise in the general or average price level of all the goods and services produced in an economy.
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rise of average price in economy
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Income
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Payments earned by households for selling or renting their productive resources. For example, workers receive wage or salary payments in exchange for their labor.
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wages
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Interest
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Payments for the use of real or financial capital over some period of time; paid by those who use the resources to those who own them, as in mortgage payments paid by a borrower to a lender.
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pay rent
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Investment
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Purchase of capital goods (including machinery, technology, or new buildings) used to make consumer goods and services.
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technology to make goods
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Keynesian Theory
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The macroeconomic theory holding that business cycles are caused by changes in aggregate demand and that such cycles can and should be influenced by fiscal and monetary policy undertaken to promote economic stability.
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business cycles caused in aggregate demand
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Labor
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The quantity and quality of human effort available to produce goods and services.
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human work
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Labor Force
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The people in a nation who are aged 16 or over and are employed or actively looking for work.
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16 or over can work
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Law of Diminishing Marginal Returns
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Describes a phenomenon observed in all short-run production processes, when at least one input (usually capital)is fixed. As more and more units of a variable input (usually labor) are added to the fixed input, the additional (marginal) output associated with each increase in units of the variable input will eventually decline. In other words, successive increases in a variable factor of production added to fixed factors of production will result in smaller increases in output.
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atleast one input is fixed.
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Macroeconomics Equilibrium
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The equilibrium level of output and the price level where aggregate demand equals aggregate supply.
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aggregate demand equals aggregate supply
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Macroeconomics
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The study of economics concerned with the economy as a whole, involving aggregate demand, aggregate supply, and monetary and fiscal policy.
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economic ideas
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Monetarist Theory
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A macroeconomic theory holding that the main cause of changes in the business cycle are changes in money supply.
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changes in business is money supply
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Definition of Money
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Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value, and a unit of account; allows people to compare the relative economic value of different goods and services.
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value use to get different goods
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Monopoly
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A market structure in which a single seller produces sells all the units of a good or service in a particular market, and where the barriers to new firms entering the market are very high.
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do not pass go do not collect $200
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National Debt
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The total amount owed by the national government to those from whom it has borrowed to finance the accumulated difference between annual budget deficits and annual budget surpluses; also called public debt.
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owed by the national government
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National Resources
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“Gifts of nature” that can be used to produce goods and services; for example, oceans, air, mineral deposits, virgin forests, and actual fields of land. When investments are made to improve fields of land or other natural resources, those resources become, in part, capital resources.
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"gifts" used to produce goods and services
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NON exclusion
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A property of certain goods and services such that (once the goods or services are provided) they cannot be denied to or withheld from people who have not paid for the goods or services; examples include street lights or national defense.
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goods that cannot be with held
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Normal Rate of Profit
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Profits just high enough to compensate producers for the explicit and implicit costs (including opportunity costs) they incur in producing a particular good or service, without leading to any net entry or exit by producers in that market. Also called normal profits. Normal profits are an economic cost of production; they mark a point at which any lower level of profit would lead a producer to pursue some other use of his or her resources.
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normal profits
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Oligopoly
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A market structure in which a few, relatively large firms account for all or most of the production or sales of a good or service in a particular market, and where barriers to new firms entering the market are very high. Some oligopolies produce homogeneous products; others produce heterogeneous products.
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market structure where large firms account for most
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Oppurtunity Cost
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The forgone benefit of the next best alternative that must be given up when scarce resources are used for one purpose instead of another.
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benefit of the next best alternate
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Poverty
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The state of being poor, variously defined. Sometimes defined relatively — by reference, for example, to the average household income in a nation or region. Sometimes defined absolutely — by reference, for example, to the income needed to provide for adequate food, housing, and clothing in a nation or region.
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being poor
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Price
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The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.
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amount of money paid for a good
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Price Elasticity of Demand
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The responsiveness of the quantity demanded of a good or service to changes in its price. The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.
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percentage change in quantity demanded
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Price Elasticity of Supply
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The responsiveness of the quantity supplied of a good or service to changes in its price. The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.
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percentage change in quantity supplied
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Producers
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People and firms that use resources to make goods and services.
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people tht use resources
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Profit
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Income received for entrepreneurial skills and risk taking, calculated by subtracting all of a firm’s explicit and implicit costs from its total revenues.
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income received
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Property Rights
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Legal protection for the boundaries and possession of property. Assigning of property rights to individuals, collectives, or governments will depend on the economic system.
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legal protection
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Public Goods
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Goods for which use by one person does not reduce the quantity of the good available for others to use, and for which consumption can not be limited to those who pay for the good.
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goods that many use...public restrooms
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Public Choice Analysis
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The study of decision making as it affects the organization and operation of government and other collective organizations. Involves the application of economic principles to political science topics.
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decisions that affect an organization
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Purchasing Power
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The amount of goods and services that a monetary unit of income can buy.
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amount of goods a unit can buy
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Quotas
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In international trade, limits on the quantity of a product that may be imported or exported, established by government laws or regulations; in command economies, more typically a production target assigned by government planning agencies to the producers of a good or service.
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limits on the quantity of a product
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Resources
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The three (or four) basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.
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resources to prduce goods
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Recession
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A decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months).
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deline of national economic activity.
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Salary
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Payments for labor resources; unlike wages, not explicitly based on the number of hours worked. See also Wages.
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payments of labor services
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Savings
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Setting aside income, or money, for a future use.
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putting away
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Scarcity
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The condition that exists when human wants exceed the capacity of available resources to satisfy those wants; also a situation in a resource has more than one valuable use. The problem of scarcity faces all individuals and organizations, including firms and government agencies.
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human wants exceed capacity
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Secured Debt
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Credit with collateral (a house or a car, e.g.) for the lender.
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a house or a car
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Services
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Activities performed by people, firms, or government agencies to satisfy economic wants.
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activities performed by people
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Shared Consumption
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A property of a good or service such that it can be used by many without diminishing another’s ability to consume the same good; examples include street lights or radio broadcasts.
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property of good or service used by many
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Shortage
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The situation that results when the quantity demanded for a product exceeds the quantity supplied. Generally happens because the price of the product is below the market equilibrium price.
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demanded is more than supplied
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Special Interest Groups
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An organization of people with a particular legislative concern. They work together to gather information, lobby politicians, and publicize their concern.
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a group of people with same inerests
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Surplus
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The situation that results when the quantity supplied of a product exceeds the quantity demanded. Generally happens because the price of the product is above the market equilibrium price.
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quanity supplied is more than demanded
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Supply
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A schedule (or graph) showing how many units of a good or service producers are willing and able to sell at all possible prices during a period of time.
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how many goods producers are willing to sell.
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Tariff
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A tax on an imported good or service.
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tax on imported goods
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Taxes
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Compulsory payments to governments by households and businesses.
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payments to government
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Total Revenue
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All money received from selling a good or service; the price times the quantity sold of each item.
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money received from selling a good
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Trade
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Voluntary exchange of goods and services for money or other goods and services.
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voluntary exchange
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Traditional Economy
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An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution.
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past customs are used to resolve economic issues
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Unemployment
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Unemployment exists when people who want to work in jobs they are qualified to do at current wage rates are not able to find jobs, or are waiting to begin a new job, or are actively looking for work but do not have the skills required to fill the jobs that are currently available.
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no job
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Unemployment rate
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The percentage of the labor force that is unemployed.
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percent of people with no job
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Unsecured Debt
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Debt without collateral; credit card debt, for example.
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credit card debt
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Utility
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An abstract measure of the satisfaction consumers derive from consuming goods, services, and leisure activities.
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goods.services.leisure activities.
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Variable cost
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Costs that change as a firm’s level of output changes. See also Fixed costs.
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cost changes as output changes
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Wage
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Payments for labor services that are directly tied to time worked, or to the number of units of output produced.
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payments for labor services
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Total Cost
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All costs associated with producing a good of service; the sum of fixed costs plus variable costs.
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sum of fixed cost plus variable costs
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