Economics and Business Lecture Notes

These vocabulary flashcards cover the fundamental concepts of economics, including indicators like GDP and unemployment, economic systems, market dynamics of supply and demand, and types of market competition as described in Chapter 2 of Understanding Canadian Business.

Economics

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various groups and individuals.

Macroeconomics

The branch of economics that looks at the operation of a nation’s economy as a whole.

Microeconomics

The branch of economics that looks at the behaviour of people and organizations in particular markets.

Adam Smith

A philosopher who published The Wealth of Nations in $1776$, suggesting that people work hard if they have incentives, and whose work became the foundation for understanding industrial societies.

Gross Domestic Product (GDP)

The total goods and services produced by the economy, used as a measure of economic performance.

Productivity

A measure calculated by dividing the total output of goods and services of a given period by the total hours of labour required to produce them.

Unemployment Rate

The percentage of the labour force (age $15$ years and over) that actively seeks work but is unable to find work at a given time.

Frictional Unemployment

Unemployment involving people who have quit work, people entering the labour force for the first time (e.g., new graduates), or those returning after significant time away.

Structural Unemployment

Unemployment caused by the restructuring of firms or a mismatch between available human capital (people and skills) and what employers require.

Cyclical Unemployment

Unemployment that occurs because of a recession or a similar downturn in the business cycle.

Seasonal Unemployment

Unemployment that occurs where the demand for labour varies over the year, such as the harvesting of crops.

Inflation

A general rise in the prices of goods and services over time.

Consumer Price Index (CPI)

The index economists use to measure the effects of inflation.

Disinflation

A condition where price increases are slowing, meaning the inflation rate is declining.

Deflation

A condition where prices are actually declining.

Business Cycles

Periodic rises and falls that occur in an economy over time, also known as economic cycles.

Expansion

A phase in the business cycle characterized by a sustained rise in the economy.

Peak

The phase in the business cycle where output reaches its highest point in the economy.

Contraction

A phase in the business cycle characterized by a sustained fall in output in the economy.

Trough

The phase in the business cycle where output is at its lowest point in the economy.

Economic System

A country’s distinct set of social customs, political institutions, and economic practices used to organize its economy.

Traditional Economy

An economic system where decisions depend on custom, and the mix of outputs and distribution methods are passed along from generation to generation.

Market Economy

An economic system based on the private ownership of economic resources and the use of markets in making economic decisions.

Command Economy

An economic system where all production property is in the hands of the government and markets are largely replaced by central planning.

Modern Mixed Economy

An economic system that combines the use of markets with a significant government presence in economic decision-making, such as in Canada.

Market

A mechanism that brings buyers and sellers together and assists them in negotiating the exchange of products.

Supply

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.

Demand

The quantity of products that people are willing to buy at different prices at a specific time.

Equilibrium Point

The place where the quantity demanded and quantity supplied meet, which determines the long-run market price.

Perfect Competition

A degree of competition that exists when many sellers are in a market and none are large enough to dictate the price of a product.

Monopolistic Competition

A degree of competition where a large number of sellers produce goods that are very similar but perceived by buyers as different.

Oligopoly

A degree of competition that occurs when a few sellers dominate a market, such as in the oil and gas or automobile industries.

Monopoly

A degree of competition occurring when only one seller dominates the market for a good or service.

Income Equity

An economic goal focused on distributing national output fairly.

Economic Growth

An economic goal focused on achieving higher living standards over time.

Ecological Sustainability

An economic goal focused on minimizing environmental harm while growing the economy.

Circular Economy

A synergistic approach to growth and sustainability involving recycling and refurbishing.