market equilibrium

equilibrium price

the price at which the quantity supplied of a good or service, or resource equals the quantity demanded; the price at which the demand and supply curves intersect ; also known as clearing price

equilibrium quantity

quantity traded when the quantity supplied of a good, service, or resource equals its quantity demanded

equilibrium price

the price at which the quantity supplied of a good or service, or resource equals the quantity demanded; the price at which the demand and supply curves intersect ; also known as clearing price

equilibrium quantity

quantity traded when the quantity supplied of a good, service, or resource equals its quantity demanded

shortage

a situation in which the quantity demanded is greater than the quantity supplied at the current market price /. also called excess demand

surplus

a situation in which the quantity supplied is greater than the quantity demanded at the current market price / also known as excess supply

price ceiling

maximum legal price at which a good, service, or resource can be sold

price floor

minimum legal price which a good, service, or resource can be sold

transfer payment

payment made by the government that does not require an exchange of economic activity in return - transfer payments often take form of payments to households

GDP

measure in which the quantities produced are valued at current year prices, measures the current dollar value of production

real GDP

measure of the constant dollar value of all final goods and services produced in a country during a fixed period of time; sometimes called inflation-adjusted GDP

consumption

all expenditures made by households on goods and services, like clothing, food, electronics, and recreation, during a given time period

government purchases

all final goods purchased by federal, state, and local governments

imports

goods, services, or resources produced abroad and sold domestically

exports

goods, services, or resources produced domestically and sold abroad

net exports

difference between exports and imports

investment

formation of new productive capital or the expansion of inventories within an economy - occurs either when firms buy goods and services that will enhance productivity and increase output or when they increase their inventories of the goods they sell

gross investment

dollar value of all new capital purchased and the expansion of inventories in an economy during a given time period

depreciation

consumption of physical capital, or the value of the capital that wears out, is used up, or becomes obsolete during a year

net investment

difference between gross investment and depreciation - represents the net change in the capital stock during a year

excise tax

tax based on the number of units purchased, not on the price paid for a good or service