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These flashcards cover key economic principles and terms that affect personal financial choices, including definitions and concepts relating to households, businesses, government, and the economy.
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Households
Individuals or families who earn income and spend money.
Businesses
Entities that produce goods and services, hire workers, and decide what to produce.
Government
The institution that provides public services, collects taxes, and regulates economic activity.
Gross Domestic Product (GDP)
The total value of all goods and services produced in a country over a specific time.
Inflation
The increase in the overall price level of goods and services over time.
Economic Cycle
The fluctuation of the economy between periods of expansion and contraction.
Expansion
A phase when the economy is growing with more jobs and higher income.
Recession
A phase when the economy is slowing down, characterized by rising unemployment.
Depression
A severe and long-lasting recession with high unemployment and major economic decline.
Fiscal Policy
Government decisions about taxes and spending to influence the economy.
Monetary Policy
Actions by the Federal Reserve that control the money supply and interest rates.
Law of Supply and Demand
Economic principle that describes how prices are determined by the relationship between supply and demand.
Scarcity
The limited nature of resources compared to unlimited wants.
Factors of Production
The inputs used to produce goods and services: land, labor, capital, and entrepreneurship.
Macroeconomics
The study of the economy as a whole, focusing on broad variables such as GDP and inflation.
Microeconomics
The study of individual economic decisions made by consumers and businesses.
Opportunity Cost
The value of the next best alternative that is given up when making a decision.
Tradeoffs
The concept that all choices involve giving something up.