SC Economics Challenge

absolute advantage

The ability to produce something with fewer resources than other producers would use to produce the same thing

alternatives

Options among which to make choices

balance of trade

The part of a nations balance of payments that deals with merchandise (or visible) imports or exports

bank commercial

A financial institution accepts checking deposits, holds savings, sells travelers checks and performs other financial services

barter

The direct trading of goods and services without the use of money

benefit

The gain received from a voluntary exchange

bond

A certificate reflecting a firms promise to pay the holder a periodic interest" payment until the date of maturity and a fixed sum of money on the designated maturity date

business firm

Private profit-seeking organizations that use resources to produce goods and services

capital

All buildings, equipment, and human skills used to produce goods and services

capital resources

Goods made by people and used to produce other goods and services. Ex: buildings, equipment, machinery

change in demand

Demand Increase and Demand Decrease

change in supply

Supply Increase and Supply Decrease

economic choice

What someone must make when faced with two or more alternative uses of a resource

circular flow of economic activity

Another name for circular flow of goods and services

circular flow of goods and services

A model of an economy showing the interactions between households and business firms as they exchange goods and services and resources in markets

collateral

Anything of value that is acceptable to a lender to guarantee repayment of a loan

command economy

A mode of economic organization in which the key economic functions---"what, how, and for whom"--- are principally determined by government directive. Sometimes called a "centrally planned economy."

comparative advantage

The principle of comparative advantage states that a country will specialize in the production of goods in which it has a lower opportunity cost than other countries

competition

The effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms

complements

Products that are used with one another such as hamburger and hamburger buns

consumers

People whose wants are satisfied by consuming a good or service

consumption

In macroeconomics,the total spending, by individuals or a nation, on consumer goods during a given period. Strictly speaking, consumption should apply only to those goods totally used, enjoyed, or "eaten up" within that period. In practice, consumption expenditures include all consumer goods bought, many of which last well beyond the period in question

consumer spending

The purchase of consumer goods and services

corporation

A legal entity owned by stockholders whose liability is limited to the value of their dtock

costs of production

All resources used in producing goods and services, for which owners receive payments

craftsperson

A worker who completes all steps in the production of a good or service

credit

In monetary theory, the use of someone else's funds in exchange for a promise to pay (usually with interest) at a later date. The major examples are short term loans from a bank, credit extended by suppliers, and commercial paper.

credit

In balance-of-payments accounting, an item such as exports that earns a country foreign currency

criteria

Standards or measures of value that people use to evaluate what is most important

decision making

Choosing from alternatives the one with the greatest benefit net of costs.

deflation

A sustained and continuos decrease in the general price level

demand

A schedule of how much consumers are willing and able to buy at all possible prices during some time period

demand decrease

A decrease in the quantity demanded at every price, a shift to the left of the demand curve

demand increase

An increase in the quantity demanded at every price, a shift to the right of the demand curve

determinants of demand

Factors that influence consumer purchases of goods, services, or resources

determinants of supply

Factors that influence producer decisions about goods, services, or resources

distribution

The manner in which total output and income is distributed among individuals or factors

division of labor

The process whereby workers perform only a single or a very few steps of a major production task (as when working on an assembly line)

durables

Consumer goods expected to last longer than three years

earn

Receive payment (income) for productive efforts

economic growth

An increase in the total output of a nation over time. Economic growth is usually measured as the annual rate of increase in a nations real GDP

economic system

The collection of institutions, laws, activities, controlling values, and human motivations that collectively provide a framework for economic decision making

economic wants

Desires that can be satisfied by consuming a good or service. Some economic wants range from things needed for survival to things that are nice to have

full employment

Concept of the natural rate of unemployment to indicate the highest sustainable level of employment over the long run

entrepeneur

One who organizes, manages, and assumes the risk of a business or enterprise

entrepreneurship

The human resource that assumes the risk of organizing other productive resources to produce goods and services

equilibrium price

The market clearing price at which the quantity demanded by buyers equals the quantity supplied by sellers

exchange

Trading goods and services with others for other goods and services or money

exchange rates

The rate, or price, at which one country's currency is exchanged for the currency of another country

excise tax

Taxes imposed on specific goods and services, such as cigarettes and gasoline

exports

Goods or services produced in one nation but sold to buyers in another nation

factors of production

Resources used by businesses to produce goods and services

federal reserve system

The central bank and monetary authority go the United States

final goods

Products that end up in the hands of the consumers

fiscal policy

A governments program with respect to 1) the purchase of goods and services and spending on transfer payments, and 2) the amount and type of taxes

functions of money

The roles played by money in an economy. These roles include medium of exchange, standard of value, and store of value

full employment

A term used in many senses. Historically, it was taken to be that level of employment at which no or minimal involuntary unemployment exists. Today economists rely upon the concept of the natural rate of unemployment to indicate the highest sustainable level of employment over the long run

goods

Objects that can satisfy people's wants

government

National, state, and local agencies that use tax revenues to provide goods and services for their citizens

GDP

The value expressed in dollars, of all final goods and services produced in a year

real GDP

GDP corrected for inflation

households

Individuals and family units which, as consumers buy goods and services from firms and, as resource owners, sell or rent productive resources to business firms

human capital

The health, strength, education, training, and skills which people bring to their jobs

human resources

The quantity and quality of human effort directed toward producing goods and services (also called labor)

incentives

Factors that motivate and influence the behavior of households and businesses. Prices, profits, and losses act as incentives for participants to take action in a market economy

imports

Goods or services bought from sellers in another nation

income

The payments made for the use of borrowed or loaned money

increase in productivity

When the same amount of an output can be produced with fewer inputs, more inputs can be produced with the same amount of inputs, or a combo of the two

inflation

A sustained and continuous increase in the general price level

interdependence

Dependence on others for goods and services, occurs as a result of specialization

interest rates

Price paid for borrowing money for a period of time, usually expressed as a percentage of the principal per year

investment in capital goods

occurs when savings are used to increase the economic capacity by financing the construction of new factories, machines, means of communication, and the like

investment

the purchase of a security, such as a stock or a bond

investment in capital resources

business purchases of new plant and equipment

investment in human capital

An action taken to increase the productivity of workers. These actions can include improving skills and abilities, education, health, or mobility of workers.

labor force

that group of people 16 years of age or older who are either employed or unemployed

labor market

a setting in which workers sell their human resources and employers buy human resources

labor union

a group of employees who join together to improve their terms of employment

land

natural resources or gifts of nature that are used to produce goods and services

law of demand

the principle that price and quantity demanded are inversely related

law of supply

the principle that price and quantity supplied are directly related

loss

business situation in which total cost of production exceeds total revenue; negative profit

market

a setting where buyers and sellers establish prices for identical or very similar products, and exchange goods and/or services

market economy

An economic system where most goods and services are exchanged through transactions by private households and businesses. Prices are determined by buyers and sellers making exchanges in private markets.

medium of exchange

one of the functions of money whereby people exchange goods and services for money and in turn use money to obtain other goods and services

mixed economy

the dominant form of economic organization in noncommunist countries. Mixed economies rely primarily on the price system for their economic organization but use a variety of government interventions (such as taxes, spending, and regulation) to handle macroeconomic instability and market failures

monetary policy

The objectives of the central bank in exercising its control over money, interest rates, and credit conditions. The instruments of monetary policy are primarily open-market operations, reserve requirements, and the discount rate.

money

anything that is generally accepted as a medium of exchange with which to buy goods and services, a good that can be used to buy all other goods and services, that serves as a standard of value, and has a store of value

money market

A term denoting the set of institutions that handle the purchase or sale of short-term credit instruments like Treasury bills and commercial paper.

national debt

the net accumulation of federal budget deficits

national income

the amount of aggregate income earned by suppliers of resources employed to produce GNP; net national product plus government subsidies minus indirect business taxes

natural resources

Gifts of nature that are used to produce goods and services. They include land, trees, fish, petroleum and mineral deposits, the fertility of soil, climatic conditions for growing crops, and so on

non-durables

consumer goods expected to last less than three years

non-price determinants of supply

The factors that influence the amount a producer will supply of a product at each possible price. The non-price determinants of supply are the factors that can change the entire supply schedule and curve.

normal profit

The minimum payment an entrepreneur expects to receive to induce the entrepreneur to perform entrepreneurial functions

normative economics

Normative economics consider "what ought to be"-- value judgments, or goals, of public policy. Positive economics, by contrast, is the analysis of facts and behavior in an economy, or "the way things are."

opportunity cost