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Trade
The exchange of goods and services between different parties.
Specialization
Each worker or country focuses on producing specific goods or services.
Exchange Rates
The value of one currency for the purpose of conversion to another.
Double Coincidence of Wants
The situation in a barter system where two parties must want what the other has.
Characteristics of Money
Includes divisibility, portability, durability, recognizability, and scarcity.
Medium of Exchange
Money used to swap goods and services.
Unit of Account
Money that provides a consistent measure of value for goods and services.
Store of Value
Money that retains value over time, allowing for future use.
Standard for Deferred Payment
Money that allows borrowing with expectations of future repayment.
Commercial Banks
Financial institutions that provide services like keeping money safe, making loans, and paying interest.
Central Bank
The government institution responsible for overseeing the banking system and monetary policy.
Interest Rate
The cost of borrowing money or the reward for saving money.
Overdraft
A short-term loan allowing an account holder to withdraw more than what is available.
Loan
A fixed amount of money borrowed for a specific purpose, repayable in installments.
Mortgage
A loan secured by the collateral of the borrower's real estate.
Gross Income
Income earned before taxes.
Disposable Income
Income available for spending or saving after taxes.
Derived Demand
The demand for labor based on the demand for the goods/services produced.
Minimum Wage
The lowest legal wage that can be paid to workers.
Trade Union
An association of workers that aims to protect their rights and interests.
Conspicuous Consumption
The purchase of goods or services to display wealth rather than for practical purposes.
Market Structure
The organizational and other characteristics of a market.
Perfect Competition
A market structure with many sellers offering identical products.
Monopoly
A market structure where a single seller dominates the market with no close substitutes.
Horizontal Integration
The merger of firms that produce the same type of goods/services.
Vertical Integration
The merger of firms involved in different stages of production.
Economies of Scale
Cost advantages that firms obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.
Internal Economies of Scale
Cost savings that accrue to a firm as it increases its output.
Purchasing Economies M
Cost savings achieved through bulk purchasing.
Financial Economies
Lower borrowing costs that larger firms can secure due to better creditworthiness.
