2nd economics midterm SG

Inflation

The ideal inflation rate is around -2% per year.

Economic systems

The way a nation chooses to operate its economy.

Traditional economy

Customs, traditions, and land beliefs shape the goods and services the economy produces. Usually the rural/agricultural.

Command economy

The government makes all the decisions about manufacturing, selling, and distributing products.

Market economy

Decisions are made by individuals and businesses based on supply and demand.

Mixed economy

Combines elements of market and command economy; balances benefits of a free market with social welfare considerations.

Factors of Production

The economic resources a nation uses to make goods.

Land

Soil, water, climate, animals, minerals, etc. Natural resources.

Labor

Agricultural, construction, factory, and service workers.

Capital

Tools, equipment, machinery, buildings, vehicles, transportation, utilities, etc.

Entrepreneurship

Business owners who innovate and take risks.

GDP

The equation used to calculate the GDP: GDP=C+I+G+(X-M).

Consumer spending

Everything people buy for personal use, such as food, clothing, cars, medical care, and recreation.

Inflation (in context of GDP)

A warning/byproduct of recession.

Opportunity cost

The value of the next best alternative.

Scarcity

The lack of resources or a product. Prices can go up.

Trade off

When something is given up in exchange for something else.

Competition

When two companies have similar products and similar consumers.

Productivity

How well an employee works.

Interest rate

The percentage a borrower pays a lender for a loan.

Unemployment Rate

The percentage of people that have no job.

CPI

The average change in price.

Bond

A certificate of debt.

Recession

A significant decline in the economy.

Monopoly

When one business has all of the market power.

Oligopoly

When a market structure is ran by a few businesses with similar products.

Perfect competition

The same product at different prices.

Price competition

When prices are changed to drive sales to a business.

Fiscal policy

The tax and spending decisions made by the government.

Antitrust laws

Prevent a monopoly.

For-profit business

A business that seeks to make a profit from its operations.

Not-for-profit organizations

Groups that do not pursue profit as a goal; they engage in charitable, educational, humanitarian, cultural, professional, or other activities, often with a social purpose.