Economics-Final Exam

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Scarcity

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*means that people do not and cannothave enough income and time to satisy their every want.

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Economics

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*the study of how individuals, families, businesses and societies use limited resources to fulfill their unlimited wants.

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Factors of Production

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*land, labor and capital

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Entrepreneurship

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*refers to the ability of individuals to start new businesses, introduce new products and processes and improve management techniques

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Market ecomony

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*system in which individuals own the factors of production and make economic decisions through free interaction while looking out for their own and their families best interests.

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economics systems

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*way in which a nation use its resources to satisfy its people's needs and wants.

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private property

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*whatever is owned by individuals rather than by government.

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Capital gain

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*Increase in value of an asset from the time it was bought to the time it was sold.

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Capital loss

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*decrease in value of an asset from the time it was bought to the time it was sold.

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stockholder

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*People who have invested in a coporation and own some its share of stock.

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demand

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*the amount of a good or service that consumer are able and willing to buy at various possible prices during a specified time period.

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supply

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*the amount of a good or service that producers are able and willing to sell at a various prices during a specified time period.

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market

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*the process of freely exchanging goods and services between buyers and sellers.

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law of demand

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*economic rule stating that the quantity demanded and price move in opposite directions.

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quantity demanded

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*the amount of a good or service that a consumer is willing and able to purchase at a specific price.

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Utility

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*the ability of any good or service to satisfy consumer wants.

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law of diminishing marginal utility

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*rule stating that the additional satisfaction a consumer gets from purchasing one or more unit of a product will lessen with each additional unit purchased.

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demand schedule

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*table showing quantities demanded at different possible prices.

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demand curve

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*downward sloping line that shows in graph form the quantities demanded at each possible price.

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complementary goods

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* a product often used with another product.

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law of supply

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*economic rule stating that price and quantity supplied move in the same direction.

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quantity supplied

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*the amount of a good or service that a producer is willing and able to supply at a specific price.

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supply curve

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*upward sloping line that shows in graph form the quantities supplied at each possible price.

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law of diminishing returns

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*economic rule that says as more units of a factor of production are added to other factors of production.

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Entrepreneur

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*person who organizes, manages and assumes the risks of a business in order to gain profits.

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joint venture

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*partnership set up for a specific purpose for a short period of time.

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Gross domestic product
GDP

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*total dollar value of all final goods and services produced in a nation in a single year.

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natinal income accounting

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* measurement of the national economy's performance, dealing with the overall economy's output and income

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Consumer price index
CPI

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*a statistical measure of the average of prices of a specified set of goods and services purchased by typical consumers in city areas.

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market basket

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*representative group of goods and services used to compile the consumer price indes.

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Producer price index
PPI

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*measure of the change in price over time that U.S. producers charge for their goods and services.

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Aggregates

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*summation of all the individual parts in the economy

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Aggregate demand

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*the total of all planned expenditures in the entire economy

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Aggregate demand curve

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*Graphed line showing the relationshi between the aggregate quanitity demanded and the average of all prices as measured by the implicit GDP price deflator.

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Fractional reserve banking

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*system in which only a fraction of the deposits in a bank is kept on hand or in reserve the remainder is available to lend.

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public goods

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*goods or services that can be used by many individuals at the same time without reducing the benefit each person receives.

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demand-pull inflation

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*theory that prices rise as the result of excessive business and consumer demand

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staglation

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*combination of inflation and stagnation