Micro and Macro economics

Gross Domestic Product (GDP)

The total market value of all final goods and services produced within a country in a given time period.

Real GDP

GDP adjusted for inflation, showing true economic growth.

Nominal GDP

GDP measured in current prices, not adjusted for inflation.

Economic Growth

An increase in a nation's output of goods and services over time.

Business Cycle

The natural rise and fall of economic growth (expansion, peak, contraction, trough).

Inflation

A general rise in prices across the economy over time.

Deflation

A general decline in prices, often associated with reduced consumer demand.

Consumer Price Index (CPI)

A measure used to track inflation by comparing prices of a basket of goods.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking work.

Full Employment

the level of employment where all individuals who are willing and able to work at the current wage rates can find a job

Fiscal Policy

Government use of spending and taxation to influence the economy.

Monetary Policy

when the government or central bank changes interest rates or the money supply to help the economy grow or slow down inflation.

Federal Reserve (The Fed)

The central bank of the U.S. that manages monetary policy.

Interest Rate

The cost of borrowing money, often controlled by the Federal Reserve.

Money Supply

The total amount of money circulating in the economy.

Budget Deficit

When government spending exceeds revenue.

Budget Surplus

When government revenue exceeds spending.

National Debt

The total amount of money a government owes to creditors.

Taxes

payments people and businesses must make to the government to help pay for public services like schools, roads, and healthcare.

Government Spending

Expenditures (Expenses) by the government on goods and services.

Aggregate Demand

The total demand for goods and services within an economy.

Aggregate Supply

The total supply of goods and services that firms are willing and able to sell.

Trade Balance

The difference between a country's exports and imports.

Trade Surplus

When exports exceed imports.

Trade Deficit

When imports exceed exports.

Exchange Rate

The value of one currency in terms of another.

Globalization

The increasing interconnection of the world economy through trade, finance, and technology.

Protectionism

Policies aimed at protecting domestic industries from foreign competition (e.g., tariffs, quotas).

Tariffs

Taxes on imported goods.

Subsidies

Financial support from the government to encourage or protect certain industries. ex Farms

Scarcity

The basic economic problem of having limited resources for unlimited wants.

Opportunity Cost

The value of the next best alternative when a decision is made.

Supply

The quantity of a good or service that producers are willing to sell at various prices.

Demand

The quantity of a good or service that consumers are willing to buy at various prices.

Law of Supply

As price increases, quantity supplied increases (and vice versa).

Law of Demand

As price increases, quantity demanded decreases (and vice versa).

Equilibrium Price (Market-Clearing Price)

The price at which quantity supplied equals quantity demanded.

Shortage

When demand exceeds supply at a given price.

Surplus

When supply exceeds demand at a given price.

Elasticity

A measure of how much quantity demanded or supplied changes with a price change.

Inelastic Demand

Demand that doesn't change much with price (e.g., gasoline).

Goods and Services

Goods are tangible products; services are activities done for others.

Consumers

People or entities that purchase goods and services.

Producers

People or entities that make or provide goods and services.

Incentives

Rewards or punishments that influence economic behavior.

Productivity

The amount of output per unit of input (like labor or capital).

Division of Labor

Breaking down production into specialized tasks to increase efficiency.

Specialization

Focusing on one task or skill to increase productivity.

Marginal Cost

The cost of producing one additional unit of a good.

Marginal Benefit

The benefit gained from consuming one additional unit of a good.

Competition

Rivalry among sellers to attract customers while lowering costs and improving quality.

Monopoly

A market with only one seller dominating the supply of a product or service.

Market Economy

Economic system in which decisions are driven by supply, demand, and prices.

Command Economy

Economic system where the government makes all economic decisions.

Mixed Economy

An economy combining elements of both market and command systems.

Price Ceiling

Government-imposed maximum price (e.g., rent control).

Price Floor

Government-imposed minimum price (e.g., minimum wage).

Entrepreneurship

The willingness to take risks and organize production to create goods/services.

Capital Goods

Tools, equipment, and buildings used to produce other goods and services.

Consumer Goods

Goods intended for final use by individuals.

Veblen good

High-quality goods bought by wealthy consumers that do not follow the Law of Demand.

Griffin Good

Products that customers consume more of when their prices rise.

Feudalism

An economic system where land was the main source of wealth, and was owned by lords who allowed peasants (serfs) to work the land in exchange for protection and a share of the crops. There was little trade or money, and wealth came from controlling land and labor.

Mercantilism

The economic idea that a country needs to amass wealth through more exporting than importing and measures wealth by the amount of gold that a nation possesses.

Bull Market

a steady rise in the stock market over a period of time

Bear market

a steady drop or stagnation in the stock market over a period of time

Bartering

Direct exchange of goods and services without the use of money.

Absolute Advantage

When a person, business, or country can produce more of a good or service with the same amount of resources than another.("Who makes more?")

Comparative Advantage

When a person, business, or country can produce a good or service at a lower opportunity cost than another.("Who gives up less to make it?")

Socialism

An economic system where the government owns or controls major key industries (Ex health care), but individuals can still own private property and businesses.

Communism

An economic system where the government (or the people collectively) owns all property and means of production, with no private ownership.

Capitalism

An economic system where individuals and businesses own property and control production, with goods and services distributed through free markets for profit.

Circular Flow

Movement in an economy of good, services, and money from consumers to producers and back again

Macroeconomics

study of the design and function of the economy as a whole

human resources

the individual people who make up the labor force of an organization

import

bring (goods or services) into a country from abroad for sale.

export

A good or service produced in the home country and sold in another country.

Trade Cap

A limit to the amount of a good that can be imported or exported

cost-benefit analysis

systematic approach used to evaluate the potential benefits and costs of a proposed project, investment, or decision

Competition (Economics)

companies will strive for a greater share of the market by producing higher quality and more cheaply priced goods

invisible hand

the theory that the economy is not led by an entity, but is the result of individuals acting in their own self-interests

trade barrier

obstacles to trade ex. government regulations

barrier to entry

any factor that makes it difficult for a new firm or business to enter a market

Capital

resources used to produce other goods and services

Laissez-faire

Idea that government should play as small a role as possible in economic affairs and should not interfere in the economy; translates to "let the people do as they choose."

Adam Smith

The father of capitalism. Wrote the book wealth of nations and argued that an invisible hand guides the economy to its greatest productivity.

Mircoeconomics

the study of how households and individuals make decisions and how they interact in the economy

economy

A system for producing, distributing, and consuming goods and services in a society.

Economics

The study of how people, businesses, and governments make choices about using limited resources to satisfy unlimited wants.