Economics Key Terms: Microeconomics, Macroeconomics, Market Structures, and Policy

Economics

the study of how choices affect the acquisition, production, and distribution of scarce resources

Microeconomics

analyzes the decision making and behaviour of individuals, households, and companies regarding the allocation of scarce resources

Macroeconomics

provides an analysis of the economy as a whole; the primary areas of focus are the economic cycles, economic growth, and economic development

supply

the quantity of a product that producers are willing to sell at each of various prices

demand

the quantity of a product that buyers are willing to purchase at each of various prices

equilibrium price

the price at which the quantity demanded is exactly equal to the quantity supplied

recession

two or more consecutive quarters (three-month periods) of contraction in a country's GDP

gross domestic product (GDP)

the total dollar value of all goods and services produced by all people within the boundaries of a country over a set period of time

gross national product (GNP)

the total market value of all final goods and services produced by a country regardless of where the goods are produced

unemployment rate

the percentage of a country's labour force unemployed at any time; calculated as the number of unemployed divided by the number of people currently in the labour force

Inflation

an economic statistic that tracks the increase in prices of goods and services over a period of time

consumer price index (CPI)

a typically monthly rolling or yearly index that measures the changes in the prices of a fixed basket of goods and services purchased by a typical consumer in an urban area

producer price index (PPI)

measures the changes in price Canadian producers receive or pay for goods and services

Deflation

an economics statistic that tracks the decrease in prices of goods and services over a period of time

Bank of Canada

Canada's central bank, whose objective is the economic and financial well-being of Canada by creating a sound balance of growth, employment, and price stability

fiscal policy

the spending and tax policies of the government

deficit

occurs when the government spends more

national debt

the total amount of money that a country's government has borrowed

Monetary policy

the process by which the monetary authority of a country controls the supply of money

contractionary policy

a type of monetary policy that reduces the money supply

expansionary policy

the use of monetary policy by the Bank of Canada to increase the growth of the money supply

economy

the way in which people deal with the creation and distribution of wealth

economic system

a combination of policies, laws, and choices made by governments to determine who owns and controls the factors of production

factors of production

the resources used to create goods and services, including natural resources, capital, labour, entrepreneurship, and knowledge

market economy

an economic system based on competition in the marketplace in which individuals own and operate the majority of businesses that provide goods and services

command economy

an economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available goods and services will be produced, and who owns and controls the major factors of production

Socialism

an economic system in which infrastructure is owned and controlled by the government

mixed economy

an economic system where most land and business are privately owned but with various levels of government involvement

competition

rivalry among businesses for sales to potential customers

perfect (or pure) competition

the market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product

monopolistic competition

a market situation in which there are many buyers along with a relatively large number of sellers that differentiate their products from the products of competitors

product differentiation

the process of developing and promoting differences between one's products and all competitive products

oligopoly

a market (or industry) in which there are few sellers

monopoly

a market (or industry) with only one seller and barriers to keep other companies from entering the industry