Economics and Business Activity Flashcards

Vocabulary flashcards generated from comprehensive lecture notes covering fundamental economic concepts, economic systems, U.S. market principles, GDP, business cycles, inflation, and financial measurements.

Goods

Things you see and touch.

Services

Activities provided for satisfaction.

Natural Resources

Materials supplied by nature.

Human Resources

People who produce goods and services.

Capital Resources

Money used in the production of goods and services.

Opportunity Cost

The value of the next best alternative (for example, getting wings instead of pizza).

Trade-off

Giving up something to have something else.

Decision Making Process

A $3$-step process consisting of: 1. Define problem, 2. Identify choices, 3. Evaluate advantages and disadvantages.

Command Economy

An economic system where resources are owned and controlled by the government, characterized by no profit, no freedom, and more famine.

Market Economy

An economic system owned by the people of the country with little government involvement, anywhere goods and services are exchanged.

Traditional Economy

A simple, undeveloped economic system found in places like African countries.

Mixed Economy

An economic system combining both command and market economies.

Four Principles of U.S. Economy

Private property, freedom of choice, profit, and competition.

Monopoly

One corporation owning everything.

Private Property

A principle allowing owners to do everything as long as it is legal, including patenting inventions.

Profit

Take home money after expenses.

Competition

A principle in the economy that keeps money low.

Supply

Inventory of a product.

Demand

The need or want of a product.

Consumer

An individual or entity buying a product or supply.

Producer

An entity that supplies a product or service.

Factors of Demand

Number of products and substitutes.

Factors of Supply

Competition and natural causes.

Gross Domestic Product (GDP)

The total value of all final goods and services produced in a country during $1$ year.

Components of GDP

Consumer spending, business spending, government spending, and net exports.

GDP per Capita

Output per person.

Personal Income

Salaries, wages, investment, and government payouts.

Retail Sales

Goods bought by consumers.

Business Cycle

Recurring ups and downs in economic activity following the sequence: Prosperity -> Recession -> Depression -> Recovery.

Prosperity

The peak of business where GDP increases.

Recession

A period when the economy slows and GDP slows for at least $2$ quarters in a year.

Depression

A phase where recession deepens and GDP falls rapidly.

Recovery

A phase where GDP begins to rise and demands for goods increase.

Inflation

An increase in the level of prices, during which buying power decreases.

Mild Inflation

Inflation of $2\text{--}3010$ (or $2\text{--}3\text{\%}$) that stimulates the economy.

Consumer Price Index (CPI)

A number that compares prices in one year with another.

Capital Spending

Money spent for items used over time.

Capital Projects

Land, buildings, and equipment.

Personal Savings

Money in a bank account.

Stock

Represents ownership (equity) in a corporation, the value of which is affected by supply and demand.

Bond

Debt for an organization.

Creditor

Status when you have lent money to the government.

Budget Surplus

Occurs when the government spends less.

Budget Deficit

Occurs when the government spends more.

Efficient Debt

Productive form of borrowing, such as loans.

Poorly Used Debt

Unwisely used debt, such as doordashed spending.