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Scarcity

A situation in which human wants exceed the available resources.

Opportunity Cost

The best forgone alternative; what is sacrificed in order to achieve something else.

Economic Systems

The ways societies organize economic activity, including traditional, command, and market economies.

Microeconomics

The branch of economics that focuses on the actions of individual agents within the economy.

Macroeconomics

The branch of economics that deals with broad issues such as economic growth, unemployment, and inflation.

Dividing Labor

The division of work into separate tasks to increase productivity.

Monetary Policy

Economic policy that involves managing the nation's money supply and interest rates.

Fiscal Policy

Government policies that influence the economy through changes in spending and taxes.

Market Economy

An economic system where decisions are decentralized and private individuals own the means of production.

Command Economy

An economic system where the government makes economic decisions and owns the means of production.

Traditional Economy

An economic system based on customs and traditions, often agricultural in nature.

Globalization

The trend of increasing interaction and economic exchange across national borders.

GDP (Gross Domestic Product)

A measure of the total production in an economy.

The Invisible Hand

A concept proposed by Adam Smith; the pursuit of self-interest leads to societal benefits.

The Federal Reserve

The central bank of the United States, responsible for monetary policy.

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type.

Supply and Demand

Economic model that describes how prices fluctuate based on the relationship between the quantity of a good or service available and the desire for that good or service.

Market Equilibrium

The state in which market supply and demand balance each other, resulting in stable prices.

Inflation

A general increase in prices and fall in the purchasing value of money.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Consumer Sovereignty

The idea that consumer preferences determine the production of goods and services.

Perfect Competition

A market structure characterized by many firms, identical products, and free entry and exit.

Externalities

The unintended consequences of an economic activity affecting third parties not involved in the transaction.

Budget Deficit

A situation where government expenditures exceed revenue.

Trade Balance

The difference between the value of a country's exports and imports.

Human Capital

The economic value of a worker's skills and experience.