PISD econ

Factor for production

Land

Factor for production

labor

Factor for production

Capital

physical capital

the human-made objects used to create other goods and services

human capital

the skills and knowledge gained by a worker through education and experience

Production Possibility Curve

Graph that shows different ways to use economic resources

Underutilization

Using less resources than available - point below production possibility curve

production possibilities frontier

the line on a production possibilities graph that shows the maximum possible output

Traditional Economy

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

Centrally Planned Economy or Command Economy

Government makes all decisions on economic production and utilization

Market Economy / Private Economy

Economic decisions are made by individuals or the open market.

Mixed Economy

A economic system that combines the private economy with limited government regulation

Scarcity

Limited resources are met with greater demand

Shortage

When a good or service is not available

Efficiency

Using resources in a way that maximizes the production of goods and services

Tradeoff

When we sacrifice an alternative

Guns and Butter

Tradeoff a country must make between military production and consumer production

thinking at the margin

Considering the utilization of one more unit of a resource

Laissez-faire

Idea that government should not be involved in economy

Demand

the desire to own something and the ability to pay for it

Supply vs Demand

Consumers buy more when the price of an object falls, and the price of an object increases when there is less of it.

Demand Schedule

a table that shows the relationship between the price of a good and the quantity demanded

Demand Curve

a graph that shows the relationship between the price of a good and the quantity demanded

Change in Quantity Demand

Change in the demand curve

Elastic Demand

When changes in price have a large impact on the demand

Inelastic Demand

When changes in price do not have a noticeable impact on the demand

Supply

The amount of goods available

Quantity Supplied

Amount of a good a supplier is willing to supply

supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

Supply Curve

a graph of the relationship between the price of a good and the quantity supplied

Elastic Supply

When a small change in price causes a major change in the supply

Inelastic supply

When change in price doesn't notably change the supply

Market Price / Equilibrium

When supply and demand are equal

Disequilibrium

When price is not market value because demand and supply don't meet

Price Floor

Minimum price for a good or service

price ceiling

A legal maximum on the price at which a good can be sold

Perfect Competition

When no company produces a notable supply more, or a notably different product, or a product at a notably lower price

natural monopoly

a market that runs most efficiently when one large firm supplies all of the output

government monopoly

a monopoly created by the government

Oligopoly

When a few companies control a market

monopolistic competition

a market structure in which many companies sell products that are similar but not identical

price war

a series of competitive price cuts that lowers the market price below the cost of production

Deregulation

Removal of certain government regulation on economy

Regulation

government intervention in a market that affects the production of a good

Sole Proprietorship

A business owned by one person

General Partnership

partnership in which partners share equally in both responsibility and liability

limited partnership

form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business

Corperation

business owned by stock holders who share profits but are not personally responsible for debts

Franchises

a semi-independent business that pays less to a parent company in return for the exclusive right to sell a certain product or service in a given area

laborforce

all non-military workers either employed or unemployed

Laws against discrimination

laws that prevent companies from paying low wages to some employees based on factors like race, sex, color, religion, or nationality.

collective bargaining

Process by which a union representing a group of workers negotiates with management for a contract

Mediation

a settlement technique in which a neutral mediator meets with each side to try to find a solution that both sides will accept

arbiration

a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides

comodity money

objects that have value in themselves and that are also used as money; ex. cattle, salt

Representative Money

objects that have value because the holder can exchange them for something else of value

Fiat Money

money that has value because the government has ordered that it is an acceptable means to pay debts

Money Supply

All the money available in the US economy

Liquidity

Ability to be used as or converted to cash

Saving/ Checking accounts

useful for people who need to make frequent, withdrawals usually pays fixed interest

money market account

a savings account that requires a minimum balance and earns interest that varies from month to month

Certificate of Deposit

a certificate issued by a bank to a person depositing money for a specified length of time.

financial asset

claim on the property or income of a borrower

Mutual Fund

fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets

Rule of 72

The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.

Savings Bond

low-denomination bond issued by the US government

Municipal bond

a bond issued by a state or local government or municipality to finance such improvements as highways, state buildings, libraries, parks, and schools

Corporate Bond

A bond that a corporation issues to raise money to expand its business

Bull Market

When the stock market undergoes a steady raise for a while

Bear Market

When the stock market undergoes a steady decline for a while

Circuit Breaker

A system to slow the stock market when it begins to fall. Its to prevent a panic

Speculation

An involvement in risky business transactions in an effort to make a quick or large profit.

Gross Domestic Product (GDP)

A dollar measurement of the total goods and services produced within a country.

Intermediate Goods

Good or services used in the production of final goods or services

Nominal GDP

the production of goods and services valued at current prices

Nomial GDP calculation

quantity x price

Real GDP

GDP adjusted for inflation

Gross National Product (GNP)

The total value of goods and services factoring in such from residents abroad, and factoring out such from non-residents locally.

Depreciation

A decrease or loss in value

Recession

period of reduced economic activity

Depression

A long-term economic state characterized by unemployment and low prices and low levels of trade and investment

capital deepening

an increase in the amount of capital per worker; one source of rising labor productivity

Frictional Unemployment

unemployment that occurs when people take time to find a job

Seasonal unemployment

Unemployment in industries that rely on seasons (such as agriculture) or based on vacation time

Cynical Unemployment

Unemployment resulting from economic downturn

Structural Unemployment

Unemployment resulting from workers lacking the skills required for the available jobs.

Consumer Price Index

Measure of average price a consumer pays in a market of goods

Quantity Theory

the idea that too much money in the economy causes inflation

Demand-pull theory

the theory that inflation occurs when demand for goods and services exceeds existing supplies

cost-push theory

The theory that costs for the producer increase, these costs are pushed onto the consumer (inflating the price)

Wage-price spiral

Raising wages creates high prices, and higher prices creates higher wages

Lorenz Curve

A curve that illustrates income distribution

Proportional Tax

Average tax rate is the same at all income levels

Progressive Tax

the percentage of income tax increases with an increase in income

regressive tax

income tax decreases as income increases