Ap Macro Ch.4&5

Front 1

budget deficit

Back 1

the amount by which the expenditures of the federal government exceed its revenues in any year

Front 2

budget surplus

Back 2

the amount by which the revenues of the federal government exceed its expenditures in any year

Front 3

business cycle

Back 3

recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, trough, and expansion phases

Front 4

business firm

Back 4

an organization that employs resources to produce a good or service for profit and owns and operates one or more plants

Front 5

centrally planned economy

Back 5

government determination of the objectives of the economy and how resources will be directed to attain those goals

Front 6

circular flow diagram

Back 6

an illustration showing the flow of resources from households to firms and of products from firms to households; these flows are accompanied by reverse flows of money from firms to households and from households to firms

Front 7

consumer sovereignty

Back 7

determination by consumers of the types and quantities of gppds and services that will be produced with the scarce resources of the economy; consumers' direction of production though their dollar votes

Front 8

corporation

Back 8

a legal entity chartered by a state or the federal government that is distinct and separate from the individuals who own it

Front 9

creative destruction

Back 9

the hypothesis that the creation of new products and production methods simultaneously destroys the market power of existing monopolies

Front 10

derived demand

Back 10

the demand for a resource that depends on the demand for the products it helps to produce

Front 11

economic efficiency

Back 11

the use of the minimum necessary resources to obtain the socially optimal amounts of goods and services; entails both productive and allocative efficiencies

Front 12

exports

Back 12

goods and servies produced in a nation and sold to buyers in other nations

Front 13

externality

Back 13

a cost or benefit from production or consumption, accruing without compensation to someone other than the buyers and sellers of the product

Front 14

Federal Reserve

Back 14

the US central bank, consisting of the Board of Governors of the Federal Reserve and the 12 Federal Reserve banks, which controls the lending activity of the nation's banks and thrifts and thus, the money supply; commonly referred to as the Fed

Front 15

financial intermediaries

Back 15

institutions that accept deposits from savers and make loans to borrowers

Front 16

fiscal policy

Back 16

changes in government spending and tax collections designed to achieve full-employment and noninflationary domestic output

Front 17

free ride

Back 17

the enjoyment of the benefits of a good by a producer or consumer without having to pay for the good

Front 18

household

Back 18

an economic unit that provides the economy with resources and uses the income received to purchase goods and services that satisfy economic wants

Front 19

imports

Back 19

spending by individuals, firms, and governments for goods and services produced in foreign nations

Front 20

investment

Back 20

in economies, spending for the production and accumulation of capital and additions to inventories

Front 21

monetary policy

Back 21

a central bank's changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth

Front 22

monopoly

Back 22

a market structure in which the number of sellers is so small that each seller is able to influence the total supply and the price of the good or service

Front 23

multinational business

Back 23

a firm that owns and operates producing units in foreign countries

Front 24

net exports

Back 24

the difference between the value of exports and the value of the imports

Front 25

partnership

Back 25

a business with two or more owners who share the firm's profits and losses

Front 26

personal consumption

Back 26

the expenditures of households for durable and nondurable consumer goods and services

Front 27

private property rights

Back 27

the right of ownership

Front 28

private sector

Back 28

households, businesses, and the international sector

Front 29

public good

Back 29

a good whose consumption by one person does not diminish the quantity or quality available for others and access to which cannot be restricted

Front 30

public sector

Back 30

the government

Front 31

rent seeking

Back 31

the use of resources simply to transfer wealth from one group to another without increasing production or total wealth

Front 32

roundabout production

Back 32

the construction and use of capital to aid in the production of consumer goods

Front 33

sole proprietorship

Back 33

an unincorporated firm owned and operated by one person

Front 34

trade balance

Back 34

the export of goods or services of a nation minus its imports of goods of services

Front 35

trade deficit

Back 35

the amount by which a nation's imports exceed its exports

Front 36

trade surplus

Back 36

the amount by which a nation's exports exceed its imports

Front 37

transfer payment

Back 37

a payment of money or goods or services by a government to a household or firm for which the payer receives no good or service directly in return

Front 38

voluntary exchange

Back 38

act of buyers and sellers freely and willingly engaging in market transactions; characteristic of capitalism and free enterprise