PRE-NIGHT FBLA ECON STUDY TERMS

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Sunk Cost

money that has already been spent and cannot be recovered

Diminishing Marginal Utility

the phenomenon that each additional unit of gain leads to an ever-smaller increase in subjective value

Disposable Income

Money after deduction of taxes and other mandatory charges

Absolute Advantage

Being able to produce using fewer resources than other producers

Comparative Advantage

Being able to produce something with a lower opportunity cost (trading something off) than other producers

Efficiency

producing the maximum possible output from available resources

The largest source of revenue for local governments is from

state and federal aid

Of the 25 million businesses in the U.S, most

a. consist of one self-employed person

b. will grow into larger businesses

c. employ more than 25 people

d. will become corporations

a. consist of one self-employed person

Frictional Unemployment

due to moving from one job to another

Structural Unemployment

due to technological change, no longer need for certain skill

Cyclical Unemployment

Dependent on the condition of the economy (recessions/expansions)

Phases of the Economic Cycle

expansion, peak, contraction, recovery

Deregulation

the removal of regulations or restrictions, especially in a particular industry

Input Costs

the set of costs incurred to create a product or service

Current Account Deficit

the country is importing more goods and services than it is exporting

Discretionary Fiscal Policy

Fiscal policy that is the direct result of deliberate actions by policymakers rather than automatic adjustments

Public Good

A commodity or service that is provided without profit to all members of society at everyone at anytime

GDP Deflator

how much a change in GDP relies on changes in the price level

Real GDP

The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a SELECTED BASE YEAR (adjusted for inflation)

Nominal GDP

GDP shown in current prices, without adjustment for inflation

Seasonal Unemployment

Losing jobs on a specific season, then becoming employed once again on another season

Cost Push Inflation

Persistently rising general price levels caused by increasing production costs

Economic Boom

Economy working at full/near-full capacity with a low level of unemployment and aggregate demand, sales and profits at or near their peak, often accompanied by rising inflation

The Consumer Price Index

A measure of inflation based on the cost of a fixed “market basket”

Market Basket

A selected group of consumer goods and services whose prices are tracked for calculating a consumer price index and measuring the cost of living

Monopolistic Competition

when many companies offer competing products or services that are similar, but not perfect, substitutes.

Aggregate Expenditure

Total of spending for final goods and services in an economy

GDP Equation

Consumption + Investment + Government + Net Exports

Bond

Financial security in which a borrower (business or gov.) is contracted to pay amount invested + specified interest rate on a specific maturity date

Balance of Trade

The difference in value between a country’s imports and exports

Laissez-Faire System

A system where government interference in the economy is minimal

Free Enterprise System

the right of individuals to make their own choices in the purchase of goods, the selling of their products and their labor, and their participation in business structure

Developing Country

a country with a lower GDP than developed countries, with a less mature and sophisticated economy

Money Market Account

A form of interest-bearing savings account

Credit Union

Member-owned nonprofit financial cooperative. Provides services to members similar to retail banks.

Commercial Bank

Controls the most money and offers the widest range of services

Interest rates for all types of credit are regulated by..

state and federal law!

The Federal Deposit Insurance Corporation insures

Commercial Bank Accounts

The saving of money by an individual

benefits the whole economy

A major benefit of a private or personal pension plan is

deferred federal income tax

Guns or Butter

Choosing between military goods (guns) and civilian goods (butter)

Traditional Economy

A system that relies on customs, history, and time-honored beliefs

Which of following is a condition that most people would NOT expect the safety net of the government of provide for?

a. injuries

b. joblessness

c. natural disasters

d. low income

d. low income

Interest Group

organized primarily for economic reasons but that engage in political activity in order to seek favorable policies from government

What is the difference between an increase in supply and an increase of quantity supplied

An INCREASE IN SUPPLY will shift the supply curve to the right

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An INCREASE OF QUANTITY SUPPLIED will be along the supply curve itself

Free Trade

international trade without quotas, tariffs, etc.

Fiscal Policy

use of government revenue collection & expedition to influence the economy, action of Congress to stabilize the economy

Monetary Policy

Set of actions to control a nation’s overall money supply and achieve economic growth

Monetary vs. Fiscal Policy

* Monetary policy refers to actions of CENTRAL BANKS
* Fiscal policy refers to the tax/spending policies of FEDERAL GOVERNMENT

Current Dollars

A currency in the current time period

Constant Dllars

A currency in the current time period

Price Discrimination

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

Oligopoly

A state of limited competition, small number of shared producers or sellers

Keynesian Theory

Theories about how in the short run (especially during recessions), economic output is influenced by AGGREGATE DEMAND

What kind of changes would be expected in the demand of a country that has a growing population?

a. a rise in the demand for recreation

v. a shift in the demand for high-quality food

c. a rise in the demand for shelter

d. a lowering in the demand for automobiles

c. a rise in the demand for shelter

What affects inelasticity (not much change in reaction to price)

* necessities
* low-cost items

Government Substidies

financial grants from government to stimulate economic activity or promote activities in PUBLIC GOOD

Non-perishable Good

Any good that can’t spoil (canned goods, dried fruit)