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Economics Vocab
| Question | Answer |
|---|---|
| Scarcity | Condition of not being able to have all of the goods and services on wants because wants exceed what can be made |
| Trade offs | sacrifing one good or service to purchase another |
| Factors of production | Labor, land, capital and entrepeneurship |
| PPC | A graph that shows the greatest combination of goods and services |
| Traditional economy | A system which economic decisions are based on customs and beliefs |
| Command economy | a system which the gov. controls factors of production |
| Mixed economy | An economic system that combines the characteristics of more than one system |
| Market Economy | A system which the individuals control factors of production |
| Laissez-Faire | A system in which the gov. lets people make their own decisions without controls |
| Law of Demand | Economic rule stating that the quantity demanded and price move in opposite directions |
| Quantity Demanded | Amount of a good/service that a consumer is willing to purchase at a certain price |
| Law of Supply | If supply goes up, price will go down |
| Quantity Supplied | Amount of a good/service that is supplied |
| Elastic Demand | Demand lowers with increase in price |
| Inelastic Demand | Demand does not change with increase in price |
| Law of Diminishing Marginal Utility | After a while, utility will lower |
| Rationing | How much of a product one is allowed |
| Law of Diminishing Returns | States that as more units of a factor of production are added, at some point the rate of increased production will diminish |
| Complimentary Goods | a good that goes w/ another good |
| Shortage | condition that occurs when quantity demanded is greater than the supply |
| Surplus | Condition that occurs when quantity demanded is less than quantity supplied |
| Price Ceiling | A max. price that can be charged for a product |
| Price floor | a min. price that can be charged for a product |
| Franchises | One business, the franchiser, sells the right to use its name/products to another |
| Dividend | A porttion of the corp.'s profit sold to stockholders |
| Perfect Competition | A market situation in which there are numerous buyers/sellers. No single buyer can affect price. |
| Monopoly | A market situation controlled by a single supplier of a good/service that has no close substitute |
| Imperfect Competition | A market situation where one buyer/seller has an impact on price |
| Oligopoly | industry dominated by a few suppliers who excerise some control over price |
| Anti-trust laws | prevents new monoplies or trusts from forming and breaks already existing ones |
| Channels of Distribution | Routes by which goods are moved from producers to consumers |
| Utility | The ability of a product to satify consumer wants |
| Minimum Wage | Fed. law that sets the lowest hourly wage that may be paid to certain types of workers |
| Aggregate Demand | Total quantity of goods/services in the entire economy that people demand |
| CPI | Measures the change in price over time for a specific group of goods |
| Transfer Payment | taking money and placing it into another person's account |
| Depression | Major decrease in economic activity during which millions are out of work |
| Business cycle | Changes in the level of total output measured by real GDP |
| Deflation | lengthy decline in price of goods |
| Inflation | prolonged rise in price of goods |
| Exports | goods sold to another country |
| GDP | allows for comparision or overall economic performance between years |
| Economic Indicators | Elecments that show the current state of a country's economy |
| FDIC | A safety net for banks so if they fail, they do not lose money |
| Monetary tools of the Fed. | Credit and supply of circulation of money |
| Fractional Reserve Banking System | Brings an end to recessions and regulates a network of banks |
| Reserve requirements | Required checks of banks |
| Monetary policy | Changing the supply of money |
| Ben Bernanke | head of Fed. Reserve |
| Social Security | provides monthly payments to people unable to work or retired |
| Externalities | controls negative side effects of production processes |
| Welfare | help based on need, regardless of taxes |
| Fiscal policy | a government policy dealing with debt or money |
| Demand-pull inflation | a theory that prices ride due to excessive business and consumer demand |
| Cost-push inflation | A theory that prices are pushed up because of unions |
| Keynes | said that the gov. should intervene during depressions. |
| Friedman | said that the gov. should stay out of business |
| Comparative Advantage | ability of one nation to produce a product at a lower cost |
| Trade Deficit | the debt a country owes from trade |
| Specialization | nations well-suited to make a certain good |
| Absolute Advantage | ability of one country, using the same quality of resources, to produce a product more efficently |
| Balance of Trade | difference between the value of a nation's exports/imports |
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