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Economics
| Term | Definition |
|---|---|
| Economics | The study of how people seek to satisfy their needs and wants by making choices. |
| Scarcity | Implies limited quantities of resources to meet unlimited wants. |
| Needs | Air, food, shelter |
| Wants | Items that we desire but that are not essential to survival. |
| Goods | Physical objects such as shoes and shirts. |
| Services | Actions or activities that one person performs for another. |
| Shortage | A situation in which a good or service is unavailable. |
| Disposable Income | Income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes. |
| Factors of Production | Land, labor, capital |
| Entrepreneur | Ambitious leaders who combine land, labor and capital to create and market new goods and services. |
| Trade offs | All the alternatives that we give up whenever we choose one course over another. |
| Guns and Butter theory | Refers to the trade offs that nations face when choosing to produce more or less military or consumer products. |
| Opportunity Cost | The loss of potential gain from other alternatives when one alternative is chosen. |
| The 3 Economic Questions | What to produce? How to produce? For whom to produce? |
| The Six Economic Goals | Low unemployment, low and stable inflation, minimal domestic economic fluctuations, minimal international economic fluctuations, high rates of economic growth, which consists of governmental and nongovernmental efforts to influence the other 5 goals |
| Safety Net | Government programs that protect people experiencing unfavorable economic conditions. |
| Economic Specialization | The concentration of the productive efforts of individuals and firms on limited numbers of activities. |
| Economic Systems | Produce and distribute goods and services in different ways. |
| Standard of Living | Level of economic prosperity. |
| Traditional Economy | Relies on habit, custom, or ritual to decide questions of production and consumption of goods and services. |
| Standard of Living in a Traditional Economy | Small, close communication, communities work as a group and only produce what's necessary. |
| Free Market Economy | An arrangement that allows buyers and sellers to exchange things. |
| Adam Smith | Scottish philosopher of economics who wrote "An Inquiry Into the Nature and Causes of the Wealth of Nations" defined economics as a science of wealth. |
| Invisible Hand Theory | Self-regulating nature of the marketplace. |
| Profit | The financial gain made in a transaction. |
| Competition | The struggle among producers for the dollar of consumers - its the regulating force in free market. |
| Consumer Sovereignty | The power of consumers to decide who gets produced. |
| Command Economy | An economy in which production, investment, prices and incomes are determined centrally by an government. |
| Karl Marx | Philosopher and economist famous for his ideas about capitalism and communism. |
| Mixed Economy | Combines the free market with limited government involvement. |
Created by:
Blissful_Olive
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