Chapter I Vocab

Budget Deficit

When a country spends more than it collects in taxes.

Business

Individuals or organizations earning profit by selling goods/services that satisfy people’s needs.

Capitalism / Free Enterprise

An economic system where individuals own and run most businesses.

Communism

An economic system where all resources are owned equally by the people, regardless of class. Founded by Karl Marx.

Competition

Rivalry between businesses for customers.

Demand

How much people are willing to buy at different prices at a specific time.

Depression

High unemployment, low consumer spending, and reduced business output.

Economic Contraction

Economy slows; less spending, cutbacks on production, and more layoffs.

Economic Expansion

Economy grows; more spending which results in higher production and employment rates.

Economic System

How a society organizes resources to make goods/services.

Economics

Study of how resources are used to produce goods/services within a social system.

Entrepreneur

A person who risks money/time/effort to develop an innovative product for profit.

Equilibrium Price

Price where number of supply equals number of demand.

Financial Resources / Capital

Money used to get resources for making products.

Free-Market System

Pure capitalism with no government control.

Gross Domestic Product / GDP

The sum of all goods and services produced in a country during a year.

Human Resources / Labor

People’s physical and mental work put into creating products and services.

Inflation

Continuous rise in prices.

Mixed Economies

Economies made up of elements from more than one economic system.

Monopolistic Competition

Few businesses selling slightly different products.

Monopoly

When only one business is providing a product in a given market.

Natural Resources

Land, forests, minerals, water, and other things that are not made by people

Nonprofit Organizations

Groups that provide goods/services without profit.

Oligopoly

When very few businesses are selling a product.

Open Economy

Economic activities occur between the country and other countries.

Product

A good or service with tangible and intangible characteristics that provide satisfaction and benefits.

Profit

Money left after costs are paid.

Pure Competition

When many small businesses are selling one standardized product.

Recession

A decline in production, employment, and income.

Socialism

The government owns and operates basic industries, but individuals own most businesses.

Stakeholders

People affected by a business’s success and outcomes.

Standard of Living

The level of wealth and material comfort that people have available to them.

Supply

The number of products that businesses are willing to sell at different prices at a specific time.

Unemployment

When people want jobs but can’t find any.