Chapter 2 - Economic and the Global Economy

Fiat money

money deemed by the government to be legal tender

International trade

the exchange of goods and services among nations

Budget deficit

when the government spends more money than it gets in revenue

Deflation

a situation in which prices are declining

Inflation

a general and progressive increase in prices

Budget surplus

when government gets more revenue than it spends

Regulator

a government role that plays to protect investors, workers, and consumers in the environment

Patent

the exclusive right granted to an inventor to prevent anyone else from using the invention for a period of time

Copyright

an exclusive right granted to an author

Intellectual Property

a person’s original idea or invention

Trademark

legal rights given to a company to protect the company’s name and reputation

Indicators

statistical economic values that help measure variables in the economy

Gross domestic product GDP

the value of all final goods and services produced in a country in a given period of time

Consumer price index CPI

measures the cost of a basket of goods and services for an urban family

Recession

an economic downturn that lasts for 6 months

Trough

a low point in a business cycle

Absolute advantage

the ability of a country to produce more of a product than another country can

Comparative advantage

the ability of a country to produce a product at a lower opportunity cost than another country

Balance of trade

the difference between the values of a country’s imports and exports in a specific period of time

Money supply

the total amount of money in circulation in the country

Federal reserve system FRS

regulates the US banking system and guides monetary policy

Embargo

used to restrict imports and exports when there is a health issue

Quota

a restriction on the quantity or value of imported goods

Tariff

increases the price of imported products which helps domestic companies compete

Protectionism

the practice of using barriers to free trade

Interdependent

they need each other to create the goods and services produced in a nation

Specialization

when tasks are divided among different workers to help increase productivity

What are the 3 functions of money?

medium or exchange, unit of value, and store of value

medium of exchange

when you purchase the things you want, you use money as a medium of exchange

unit of value

helps you compare prices on the goods and services you want to buy

store of value

you can accumulate and save money without losing value

Securities and Exchange Commission(SEC) regulates?

the sale of stocks and bonds

Occupational Safety and Health Administration(OSHA) does?

issues guidelines for worker safety

Equal Employment Opportunity Commission(EEOC) regulates?

hiring, firing, and promotions based on ability and not age or gender

Food and Drug Administration(FDA) regulates?

the safety and labeling of food, drugs, and cosmetics

Consumer Product Safety Commission regulates?

products other than food, drugs, and cosmetics and can recall unsafe products

Federal Trade Commission(FTC) protects?

consumers by enforcing laws that regulate competition, consumer protection, and the economy

Environment Protection Agency(EPA) protects?

the health of people in the u.s. and environment

FICA stands for??

Federal Insurance Contribution Act

What are the 3 goals of an economy?

economic growth, stable prices, and full employment

What are the 3 economic indicators?

gross domestic product, consumer price index, and unemployment rate

what is the order of the business cycle?

expansion, recession, trough, and recovery

What countries are included in NAFTA?

Canada and Mexico