American Civ 10: Economics Vocabulary
\n \n
Law of Supply: the principle that states that as the price of an item increases, so will the amount of the item supplied producers are willing to supply and vice versa
\n \n
Law of Demand: the principle that as the price of an item increases, a smaller quantity of the item will be purchased and vice versa
\n
Money: any object used as a medium of exchange. A store of wealth, and a measure of value
\n
Factors of production: the resources needed to produce goods and services such as land, labor, capital and the entrepreneur.
\n
Deficit budget: when the government spends more money than it collects in income for one year.
\n
Demand schedule: a table that shows how much of a product consumers will demand at various possible prices.
\n
Supply schedule: a table that shows how much of a product consumers will demand at various possible prices.
\n
Depression: a major decline in business activity that lasts for more than 6 months characterized by high rate of unemployment.
\n
Recession: a minor decline in business activity that lasts for less than 6 months
\n
Capitalism: an economic system characterized by private ownership of resources, profit motive, competition, and market systems.
\n
Market: any place buyer and seller meet.
\n
Consumer price index: a statistic used to measure changes in the level of prices.
\n
Economics: the social science that studies how human societies use scarce resources to satisfy unlimited wants.
\n
Microeconomics: the branch of economics that studies the behavior of individuals and individual firms.
\n
Macroeconomics: the branch of economics that studies the large economic issues and the economy as a whole.
\n
Gross domestic product: (GDP) the dollar value of all finished goods and services produced within the nations’ boundaries within one year.
\n
Gross national product: (GNP) the dollar value of all finished goods and services produced within the nation’s boundaries and the foreign sector within one year.
\n
Inflation: a period of rising prices.
\n
Monetary policy: the government’s adjusting the money supply and interest rates to influence changes in the economy.
\n
Fiscal policy: the government’s adjusting taxation and government spending to influence changes in the economy (Demand-Side/Keynesian Economics).
\n
Aggregate demand: the total quantity of goods and services demanded
\n
Business cycle: the pattern of growth and decline of real GNP; including four phases: expansion, inflation, recession and depression.
\n
Capital: items used to produce goods and services such as machinery, money, and tools.
\n
Real gdp: Gross Domestic Product adjusted for inflation
\n
Command economy: an economic system where a central authority makes the major decisions.
\n
Stagflation: a period of rising prices (inflation) combined with increases in unemployment.
\n
Prime interest rate: the interest rate banks offer their most preferred customers.
\n
Disposable income: income available to consumers after taxes are deductible.
\n
Opportunity cost: the value in time, money, resources given up in making a choice.
\n
Supply side economics: (trickle-down economics) the theory that government can encourage economic growth by helping businesses.
\n
Equilibrium price: the price where the quantity supplied equals the quantity demanded.
\n
Invisible hand theory: a theory by Adam Smith stating each person acting for their own well-being will serve the interests of society as a whole.
\n
Socialism: an economic system where the resources needed to produce goods and services are owned by the government.
\n
Government subsidy: a government payment to encourage or protect a certain economic activity.
\n
Interest vs. interest income: interest is the price for borrowed money; interest income is what is earned by one who loans money.
National debt: the total amount of money the federal government borrows; the annual deficits combined.
\n
Aggregate supply: the total value of goods and services that all firms produce in a specified period of time.
\n
Asset: an item of value such as money, stock, land, etc.
\n
Elasticity of demand/supply: how sensitive changes in the quantity demanded are to change in price.
\n
Business investment: business decisions to spend ono capital goods to promote economic growth.
\n
Bond: a loan of money; an IOU
\n
Tariff: a tax placed on imported products.
\n
Protectionist trade policy: a foreign trade policy that protects domestic producers with tariffs or quotas.
\n
Trade deficit: trade where spending on imports exceeds money made from selling exports.