BKHS FBLA Economics

Axes

The fixed lines on a graph which carry the scales against which the coordinates are plotted

Balance of trade

A record of a country's exports and imports of goods and services

Board of directors

Individuals chosen by shareholders in a corporation to administer the affairs of the business

Capital

Usually used in the "real" sense in economics to refer to machinery and equipment, structures and inventories, that is, produced goods for use in further production Distinguished from "financial capital", meaning funds which are available to finance the production or acquisition of real capital

Capital account

That part of the balance of payments accounts which records a country's lending and borrowing transactions

Capital goods

Unlike goods intended to be consumed, capital goods are used to produce other goods Machinery in a factory would be an example of capital goods

Capitalism

A system of economic organization characterized by the private ownership of the means of production, private property, and largely market-based control over the production and distribution of goods and services

Central bank

An agency empowered by a government to manage a country's monetary and financial institutions, issue and maintain the domestic currency, and handle the official reserves of foreign exchange Primarily a "bank for banks."

Ceteris paribus

The Latin for "other things being equal."

Change in demand

An increase or decrease in the quantity demanded over a range of prices. Shown by a shift of the demand curve

Choice

Because wants are unlimited and resources are limited, all economies must choose which goods and services should be produced and in what quantities

Competition

In the general sense, a contest among sellers or buyers for control over the use of productive resources. Sometimes used as a shorthand way of referring to perfect competition, a market condition in which no individual buyer or seller has any significant influence over price

Competitive firm

A firm operating under conditions of perfect competition, a market condition in which no individual buyer or seller has any significant influence over price. A competitive firm is a price taker, responding to whatever price is established in the market for its output

Constant dollars

Sometimes called "real dollars," to refer to price data which have been adjusted to remove the effect of changes in the general level of prices

Consumption

Spending to acquire consumer goods and services, or using up those goods and services to satisfy wants

Corporation

A legal entity formed to conduct business and possessing certain privileges not available to single proprietorships or partnerships, notably limited liability which confines the shareholder's possible losses to the amount paid to purchase shares in the business

Current dollar

Values which have not been adjusted to remove the influence of changes in the general price level.

Deflation

A fall in the general level of all prices. The opposite of inflation

Depreciation

The using up or wearing out of capital goods

Deregulation

Reducing or eliminating government intervention to control particular market activities, especially of private firms. For example, removing price controls or monopoly privileges

Diminishing returns

The tendency for additional units of a productive factor to add less and less to total output when combined with other inputs which are to some degree fixed in quantity Combining more of a variable input, such as labour, with a given amount of some other input, such as capital in the form of a machine, will eventually result in the marginal product for labour declining

Disposable income

The income a person or household has left to dispose of after income tax has been deducted from personal income. Disposable income may either be spent on consumption or saved

Dissaving

If individuals or households spend more than their current income they are said to be dissaving

Entrepreneurship

The ability and willingness to undertake the organization and management of production As well as making the usual business decisions, entrepreneurship is often associated with the functions of innovating and bearing risks

Equity

May be used in either of two unrelated senses. In the context of income distribution theory, refers to an objective, goal or principle implying "fairness." In a financial context may refer to a share or portion of ownership

Exchange rate

The price of one country's currency in terms of another's

Firms

Economic entities which buy or employ factors of production and organize them to create goods and services for sale

Fiscal policy

The use by a government of its expenditures on goods and services and/or tax collections to influence the level of national income

Government spending

The total outlays by government on goods and services during some accounting period, usually a year. Government outlays such as welfare benefits to households, for example, are normally excluded from this amount on the grounds that they are merely transfers of income from taxpayers to the beneficiaries of such programs

Graph

A visual representation of a relationship between two variables, usually drawn to some specified scale

Gross Domestic Product (GDP)

The value of all the goods and services produced in an economy during some accounting period, usually a year

Gross National Expenditure (GNE)

The sum of all spending on consumption and investment plus government spending on goods and services and net exports (total exports minus imports) It is equivalent in value to GDP

Human capital

The stock of knowledge and acquired skills embodied in individuals

Indirect taxes

Taxes levied on a producer which the producer then passes on to the consumer as part of the price of a good Distinguished from direct taxes, such as sales taxes which are visible to the person who pays them

Inferior good

A good for which the demand decreases when income increases When a household's income goes up, it will buy a smaller quantity of such a good

Inflation

A general rise in the average level of all prices

Interest rate

The percentage rate which must be paid for the use of investable funds

Interest

The payment made for the use of funds to create capital goods with

Inventories

Stocks of goods in the hands of producers These stocks are included in the definition of capital and an increase in inventories is considered to be investment

Investing

Creating capital goods. Acquiring or producing structures, machinery and equipment or inventories

Involuntary unemployment

Unemployment caused by a deficiency in aggregate demand

Labor

The economically productive capabilities of humans, their physical and mental talents as applied to the production of goods and services

Laissez-faire

A doctrine advocating a minimum role for government in the economy, such as providing for defence against external enemies, a system of law to protect individuals and their property, and production of such goods and services which for some reason are needed, but would not be produced by private firms

Land

All natural resources The "gifts of nature" which are economically useful

Law of demand

The inverse relationship between price and quantity of a good or service demanded

Liabilities

In general, debts owed by individuals or firms. In the case of commercial banks, their liabilities are largely in the form of what they owe their customers, that is, the total amount of deposits held

Macroeconomics

The branch of economic theory concerned with the economy as a whole. It deals with large aggregates such as total output, rather than with the behaviour of individual consumers and firms

Market demand

The relationship between the total quantity of a good demanded and its price

Market failure

Instances of a free market being unable to achieve an optimum allocation of resources

Markets

Any coming together of buyers and sellers of produced goods and services or the services of productive factors

Mercantilism

A body of policy recommendations designed to promote the development of the early nation states of western Europe in the 17th and 18th centuries. The emphasis was on utilizing trade to increase national wealth at the expense of the countries being traded with through fostering a "favourable balance of trade", by which was meant an excess of exports over imports

Monetary base

The same as "high-powered money": cash in commercial banks, plus cash in circulation and deposits of the commercial bank at the central bank

Monetary policy

The use of the central bank's power to control the domestic money supply to influence the supply of credit, interest rates and ultimately the level of real economic activity

Money

Anything generally acceptable in exchange Money serves a number of functions: it is a medium of exchange, it is used as a unit of account, and it can be used as a store of value In its latter use, it is an alternative to holding value in the form of goods or other types of financial assets such as stocks or bonds

Monopoly

Strictly defined as a market situation in which there is a single supplier of a good or service, but often used to suggest any situation in which a firm has considerable power over market price

National income

The general term used to refer to the total value of a country's output of goods and services in some accounting period without specifying the formal accounting concept such as Gross Domestic Product

Natural increase

Growth of the population due to an excess of births over deaths

Natural monopoly

A market situation in which economies of scale are such that a single firm of efficient size is able to supply the entire market demand

Natural rate of unemployment

The rate of unemployment that would exist when the economy is operating at full capacity. It would be equal to the amount of frictional unemployment in the system

Net exports

The total value of goods and services exported during the accounting period minus the total value of goods and services imported

Net immigration

The total number of people leaving the country to take up permanent residence abroad minus the number of people entering the country for the purpose of taking up permanent residence

Net investment

Total investment during some accounting period minus the amount of depreciation during the same period

Partnership

An unincorporated business owned by two or more people

Per capita income

Total income divided by the size of the population

Price discrimination

The selling of a good or service at different prices to different buyers or classes of buyers in the absence of any differences in the costs of supplying it

Price

What must be paid to acquire the right to possess and use a good or service

Privatization

The selling-off of publicly owned enterprises to private owners

Profit

When a firm's revenues exceed its costs, profit is the difference between the two

Quota

A limitation on the amount of a good that can be produced or offered for sale domestically or internationally

Resources

All those things which can be used to produce economic satisfaction

Scarcity

The fact that human wants exceed the means of satisfying them

Shareholder

Owner of some fraction of the stock issued by a corporation

Single proprietorship

A form of unincorporated business in which there is only one owner

Size distribution of income

The distribution of income among groups of income recipients defined on the basis of the size of their incomes

Social cost

The real cost to society of having a good or service produced, which may be greater than the private costs incorporated by the producer in its market price

Tariff

A tax imposed on an imported good

Tort

In law, a private or civil wrong

Wages

The general term applied to the earnings of the factor of production, labour

Wants

The apparently limitless desires or wishes people have for particular goods or services