Midterm Economics and Personal Finance.

Macroeconomics

The branch of economics that studies the overall performance and behavior of an economy as a whole, including inflation, unemployment, and economic growth.

Business Cycle

The natural fluctuation of the economy between periods of expansion (growth) and contraction (decline).

Expansion

A phase of the business cycle where economic activity is increasing, characterized by rising GDP, employment, and income.

Peak

The highest point of economic growth before a downturn occurs in the business cycle.

Contraction

A phase of the business cycle where economic activity is declining, leading to lower GDP, employment, and income.

Trough

The lowest point of economic decline before the economy begins to recover.

Recession

A period of economic decline lasting at least two consecutive quarters, marked by falling GDP and rising unemployment.

Depression

A prolonged and severe economic downturn characterized by extremely high unemployment and a significant decline in GDP.

Economic Indicators

Data used to assess the overall health of the economy, including GDP, unemployment rates, and inflation.

Leading Indicators

Economic data that predict future economic activity, such as stock market trends and new business permits.

Lagging Indicators

Economic data that confirm trends after they have already started, such as unemployment rates and corporate profits.

Coincident Indicators

Economic data that move in tandem with the overall economy, such as retail sales and industrial production.

GDP (Gross Domestic Product)

The total value of all goods and services produced within a country over a specific period.

Unemployment

The percentage of the labor force that is jobless and actively seeking employment.

Interest Rates

The cost of borrowing money, typically expressed as a percentage, which influences spending and investment.

Consumer Price Index (CPI)

A measure of the average change in prices paid by consumers for goods and services over time, used to track inflation.

Stock Market

A marketplace where stocks and other securities are bought and sold, reflecting overall economic performance.

Bull Market

A financial market in which stock prices are rising, often signaling economic growth and investor confidence.

Bear Market

A financial market in which stock prices are falling, often signaling economic decline and investor pessimism.

Business Expectations

Predictions made by businesses about future economic conditions, influencing decisions on investment and hiring.

Retail Sales

The total amount of sales made by retailers, which serves as an indicator of consumer spending and economic health.

Consumer Expectations

The outlook that consumers have about the future state of the economy, affecting their spending habits.

Industrial Production

A measure of output from industries such as manufacturing, mining, and utilities.

Job Openings

The number of available positions employers are actively seeking to fill.

Inflation

The rate at which the general level of prices for goods and services is rising, reducing purchasing power.

Fiscal Policy

Government decisions on taxation and spending used to influence the economy.

Loose/Expansionary Fiscal Policy

A fiscal approach that involves increased government spending and/or tax cuts to stimulate economic growth.

Tight/Contractionary Fiscal Policy

A fiscal approach that involves decreased government spending and/or tax increases to slow down economic growth.

Austerity

Government policies that involve reducing public spending and increasing taxes to control debt.

Monetary Policy

Actions taken by a central bank, such as the Federal Reserve, to manage money supply and interest rates to influence the economy.

The Federal Reserve

The central banking system of the United States, responsible for regulating the money supply and interest rates.

Discount Rate

The interest rate the Federal Reserve charges banks for short-term loans.

Reserve Requirement

The minimum amount of reserves that banks must hold, set by the Federal Reserve, to ensure financial stability.

Mandatory Spending

Government expenditures required by law, such as Social Security and Medicare.

Discretionary Spending

Government spending that is decided by Congress through the annual budget process, such as education and defense.

Progressive Tax

A tax system in which higher-income individuals pay a larger percentage of their income in taxes compared to lower-income individuals.

Proportional Tax

A tax system in which all individuals pay the same percentage of their income in taxes, regardless of earnings.

Regressive Tax

A tax system in which lower-income individuals pay a higher percentage of their income in taxes compared to higher-income individuals.

Excise Tax

A tax imposed on specific goods or services, such as gasoline, alcohol, and tobacco.

Estate Tax

A tax on the transfer of property after a person's death.

Property Tax

A tax on real estate, based on the value of the property, used primarily to fund local governments and schools.

Private Sector

The part of the economy that is run by private individuals and businesses rather than the government.

Public Sector

The part of the economy that is controlled by the government, including public services and government-owned enterprises.

Unions

Organizations of workers formed to protect and advance their rights, wages, and working conditions.

Privatization

The process of transferring ownership of a business or service from the government to the private sector.

Department of State

A federal agency responsible for foreign policy and international relations.

Department of Justice

A federal agency responsible for enforcing laws and administering justice in the U.S.

Department of Treasury

A federal agency responsible for managing government revenue, issuing currency, and overseeing the economy.

Department of Commerce

A federal agency that promotes economic growth, job creation, and technological innovation.

Trusts

Large business entities that dominate industries and reduce competition, often leading to monopolistic behavior.

Sherman Anti-Trust Act

A federal law passed in 1890 to prevent monopolies and promote fair competition.

Clayton Anti-Trust Act

A federal law passed in 1914 to strengthen antitrust regulations and prevent unfair business practices.

Food and Drug Administration (FDA)

A government agency that regulates food, drugs, and medical products to ensure safety and effectiveness.

Federal Communications Commission (FCC)

A government agency that regulates communications, including radio, television, and the internet.

Consumer Product Safety Commission (CPSC)

A government agency that ensures consumer products meet safety standards to prevent injuries.

Federal Trade Commission (FTC)

A government agency that protects consumers from unfair business practices and promotes competition.

Securities and Exchange Commission (SEC)

A government agency that regulates financial markets and protects investors from fraud.

Occupational Safety and Health Administration (OSHA)

A government agency that ensures safe and healthy working conditions for employees.

Entitlement Programs

Government programs that provide financial benefits to individuals who meet eligibility criteria, such as Social Security and Medicaid.

Subsidies

Financial assistance provided by the government to support industries, businesses, or individuals.

Revenue

The total income a government collects, primarily through taxes.

Expenditures

Government spending on programs, services, and infrastructure.

Private Good

A product or service that is consumed by an individual and not available for others once used.

Public Good

A product or service that is available to all members of society, such as national defense and public parks.

Bonds

Financial instruments that represent a loan made by an investor to a government or corporation, repaid with interest over time.

Taxes/Taxation

The process by which governments collect money from individuals and businesses to fund public services.

Property Rights

Legal ownership of resources, including land, intellectual property, and personal belongings.

Copyright

A legal right that grants creators exclusive control over their creative works, such as books, music, and software.

Contracts

Legally binding agreements between two or more parties.

Patents

Legal protections granted to inventors, giving them exclusive rights to their inventions for a specific period.

Intellectual Property

Creations of the mind, such as inventions, literary works, and trademarks, that are legally protected.

Economics

The study of how individuals and societies allocate limited resources to satisfy unlimited wants.

Economic System

The structure a society uses to determine the production, distribution, and consumption of goods and services.

Traditional Economy

An economic system based on customs, traditions, and beliefs.

Command Economy

An economic system where the government controls production and distribution.

Market Economy

An economic system driven by individual choices and market forces.

Mixed Economy

A combination of market and command economic systems.

Capitalism

An economic system where private individuals or businesses own capital and operate for profit.

Socialism

An economic system where the government owns and controls key industries.

Communism

A political and economic system where property is communally owned, and production is planned by the state.

Per Capita GDP

Gross Domestic Product divided by the population, indicating the average economic output per person.

GDP (Gross Domestic Product)

The total value of all goods and services produced within a country in a given period.

Scarcity

Limited resources compared to unlimited wants and needs.

Resources

Inputs used to produce goods and services, such as land, labor, and capital.

Needs

Essentials required for survival, like food and shelter.

Wants

Desires that are not essential for survival but improve quality of life.

Economic Questions (What? How? For Whom?)

The fundamental questions any economy must answer about production and distribution.

Trade-offs

Choices that involve giving up one thing to gain another.

Opportunity Costs

The value of the next best alternative foregone when making a decision.

Division of Labor

Assigning different tasks to different people to improve efficiency.

Invisible Hand

Adam Smith's concept that self-interest in free markets leads to societal benefits.

Wealth of Nations

A seminal book by Adam Smith explaining free-market economics.

Market Structure

The organization and characteristics of a market, including competition levels.

Perfect Competition

A market with many sellers offering identical products.

Monopolistic Competition

A market with many sellers offering differentiated products.

Oligopoly

A market dominated by a few large sellers.

Pure Monopoly

A market with a single seller.

Demand

The quantity of a product or service consumers are willing to buy at various prices.

Microeconomics

The study of individual markets and the behavior of consumers and firms.

Demand Schedule

A table showing quantities demanded at different prices.