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33 Cards in this Set
- Front
- Back
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Aggregate Demand
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Aggregate Demand (AD)
A schedule (or graph) that shows the value of output (real GDP) that would be demanded at different price levels. |
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Aggregate Supply
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Aggregate Supply (AS)
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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Barter
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Barter
Trading a good or service directly for another good or service, without using money or credit. |
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Benefit Budget
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Benefit
The advantage(s) of a particular course of action as measured by good feeling, dollars, or number of items |
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Budget Defecit
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Budget Deficit
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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Budget Surplus
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Budget Surplus
Refers to national budgets; occurs when government income is greater than government spending in a given year |
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Business Cycles
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Business Cycles
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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Capital
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Capital
Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools, and equipment. |
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Competition
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Competition
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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Compound Interest
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Compound Interest
Interest that is earned not only on the principal but also on the interest already earned. |
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Consumer Price Index
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Consumer Price Index (CPI)
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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Consumer Surplus
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Consumer Surplus
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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Consumer Competition
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Competition
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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Cost
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Costs
The disadvantages of a particular course of action as measured by bad feeling, dollars, or numbers of items. |
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Credit
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Credit
The opportunity to borrow money or to receive goods or services in return for a promise to pay later. |
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Credit
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Credit
The opportunity to borrow money or to receive goods or services in return for a promise to pay later. |
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Debt
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Debt
Money owed to someone else. Also see Debt for individual and National debt. |
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Deflation
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Deflation
A sustained decrease in the average price level of all the goods and services produced in the economy. |
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Demand
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Demand
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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Distribution
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Distribution
The allocation or dividing up of the goods and services a society produces |
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Division of Labor
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Glossary
A B C D E F G H I K L M N O P Q R S T U V W Absolute Advantage The ability to produce more units of a good or service than some other producer, using the same quantity of resources. Adaptive Expectations Expectations about inflation or other economic events. Aggregate Demand (AD) A schedule (or graph) that shows the value of output (real GDP) that would be demanded at different price levels. View Capstone Lesson(s) that address this concept » Aggregate Supply (AS) 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. View Capstone Lesson(s) that address this concept » Alternative One of many courses of action that might be taken in a given situation. View Capstone Lesson(s) that address this concept » Assumptions Beliefs or statements presupposed to be true. View Capstone Lesson(s) that address this concept » top ^ Balance of Payments The record of all transactions (in goods, services, physical and financial assets) between individuals, firms, and governments of one country with those in all other countries in a given year, expressed in monetary terms. View Capstone Lesson(s) that address this concept » Balance of Trade The part of a nation’s balance of payments accounts that deals only with its imports and exports of goods (also called merchandise or “visibles”). When “invisibles,” or services, are added to the balance of trade, the result is a nation’s balance on the current account section of its balance of payments. Barriers to Entry Factors that restrict entry into an industry and give cost advantages to existing firms. Examples would include the large size of existing firms, control over an essential resource or information, and legal rights such as patents and licenses. View Capstone Lesson(s) that address this concept » Barter Trading a good or service directly for another good or service, without using money or credit. Benefit The advantage(s) of a particular course of action as measured by good feeling, dollars, or number of items. View Capstone Lesson(s) that address this concept » Bond A contractual obligation to repay a specified amount of money in a specified amount of time, including a set rate of interest on the amount that is borrowed. View Capstone Lesson(s) that address this concept » Budget An element of financial planning where all income is listed and compared to all expenditures. Often expenditure decisions need to be made to hold spending less than or equal to income. View Capstone Lesson(s) that address this concept » Budget Deficit 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. View Capstone Lesson(s) that address this concept » Budget Surplus Refers to national budgets; occurs when government income is greater than government spending in a given year. View Capstone Lesson(s) that address this concept » Business Cycles 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). top ^ Capital Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools, and equipment. View Capstone Lesson(s) that address this concept » Capital Account Part of a nation’s balance of payments accounts; records capital outflows — i.e., expenditures made by the nation’s residents to purchase physical capital and financial assets from the residents of foreign nations; also records capital inflows — i.e., expenditures by residents of foreign nations to purchase physical capital and financial assets from residents of the nation in question. View Capstone Lesson(s) that address this concept » Choice Course of action taken when faced with a set of alternatives. View Capstone Lesson(s) that address this concept » Collusion An agreement between firms to fix prices or engage in other activities to restrict competition in an industry. View Capstone Lesson(s) that address this concept » Command Economy An economy in which most economic issues of production and distribution are resolved through central planning and control. View Capstone Lesson(s) that address this concept » Comparative Advantage The ability to produce a good or service at a lower opportunity cost than some other producer. This is the economic basis for specialization and trade. View Capstone Lesson(s) that address this concept » Competition 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. View Capstone Lesson(s) that address this concept » Complements Goods and/or services that are often consumed together; e.g., left and right socks, or tennis rackets and tennis lessons. View Capstone Lesson(s) that address this concept » Compound Interest Interest that is earned not only on the principal but also on the interest already earned. Concentration Ratio The percentage of total industry by the largest firms (generally four or eight) in an industry. The concentration ratio provides a measure of domination in an industry by a few firms and serves as a measure of whether an industry is an oligopoly. View Capstone Lesson(s) that address this concept » Consumer Price Index (CPI) 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. Consumer Surplus 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. View Capstone Lesson(s) that address this concept » Consumers People who use goods and services to satisfy their economic wants. Consumption People who use goods and services to satisfy their economic wants. View Capstone Lesson(s) that address this concept » Contractionary Fiscal Policy A decrease in government spending and/or an increase in taxes designed to decrease aggregate demand in the economy andn control inflation. View Capstone Lesson(s) that address this concept » Costs The disadvantages of a particular course of action as measured by bad feeling, dollars, or numbers of items. View Capstone Lesson(s) that address this concept » Credit The opportunity to borrow money or to receive goods or services in return for a promise to pay later. Crowding-Out Increased interest rates and decreased private investment caused by government borrowing. View Capstone Lesson(s) that address this concept » Current Account Part of a nation’s balance of payments accounts; records exports and imports of goods and services, net investment income, and transfer payments with other countries. View Capstone Lesson(s) that address this concept » Cyclical Unemployment Unemployment caused by fluctuations in the overall rate of economic activity. See also Business cycles. top ^ Debt Money owed to someone else. Also see Debt for individual and National debt. View Capstone Lesson(s) that address this concept » Debt for Individual Money a person owes to someone else, usually a financial institution. Deflation A sustained decrease in the average price level of all the goods and services produced in the economy. Demand 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. View Capstone Lesson(s) that address this concept » Determinants of Demand Factors other than the price that change (shift) the demand schedule, causing consumers to buy more or less at every price. Factors include income, number of consumers, preferences, and prices of related goods. View Capstone Lesson(s) that address this concept » Determinants of Supply Factors other than price that change (shift) the supply schedule, causing producers to supply more or less at every price. Factors include number of firms, production costs, and new technology. View Capstone Lesson(s) that address this concept » Diminishing Marginal Utility A widely observed relationship in which the additional satisfaction (marginal utility) associated with consuming additional units of the same product in a given amount of time eventually declines. View Capstone Lesson(s) that address this concept » Distribution The allocation or dividing up of the goods and services a society produces. View Capstone Lesson(s) that address this concept » Division of Labor 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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Economic Functions of Labor
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Economic Functions of Government
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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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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Economic Incentives
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Economic Incentives
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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Definition of Economics
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The study of how people, firms, and societies choose to use scarce resources.
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Elasticity
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See Price elasticity of demand, Price elasticity 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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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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Fiscal 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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Foreign Exchange Market
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Market where demand for and supply of foreign currencies determines exchange rates.
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Goods
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Tangible objects that satisfy economic wants.
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Gross Domestic Product
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Tangible objects that satisfy economic wants.
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Human Capital
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The health, education, experience, training, and skills of people.
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