ADE 1 Flashcards
Competitive market
a market in which there are many sellers and buyers so that each has a negligible impact on the market price
Consumption
spending by households on goods and services with the exception of purchases of new housing
Economic growth
the increase in the amount of goods and services in an economy over a period of time
discount rate
the interest rate at which the Federal Reserve lends on a short-term basis to the US banking sector
Economy
a word to describe all the economy actvity(buying and selling or transactions) that take place in a country or region
Efficiency
the property of a resources alllocation of maximizing the total surplus received by alll members of society
direct tax
a tax that is levied directly on a person’s income
Consumer prices index (CPI)
A measure of the overall prices of the goods and services bought by a typical consumer
Crowding out
A decrease in investment that results from government borrowing
demand curve
a graph of the relationship between the price of a good and the quantity demanded
Depreciation
A decrease in the value of a currency as measured by the amount of foreign currency it can buy
Constant returns to scale
the property whereby long-run average total cost stays the same as the quantity of output changes
Equilibrium
a situation in which the price has reached the level where quantity supplied equals quantity demanded
European Economic and Monetary Union (EMU)
The European currency union that has adopted the euro as its common currency
Economic profit
total revenue minus total cost, including both explicit and implicit costs
Consumer surplus
a buyer’s willingness to pay minus the amount the buyer actually pays
Economics
the study of how society mananges its scare resources
Customs union
a group of countries that agree not to impose any restrictions at all on trade between their own economies, but to impose the same restrictions as one another on goods imported from countries outside the group
deadweight loss
the fall in total surplus that results from a market distortion, such as a tax
Discrimination
the offering of different oppportunities to similar individuals who differ only by race, ethnic grup, sex, age or other personal characteristics
Cost
The value of everything a seller must give up to produce a good
European Central Bank (ECB)
the overall central bank of the 16 countries comprising the European Monetary Union
Cyclical unemployment
the deviation of unemployment from its natural rate
depression
a severe recession
Efficiency wages
Above-equilibrium wages paid by firms in order to increase worker productivity
Currency
the paper banknotes and coins in the hands of the public
Crowding-out effect
the offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending
demand deposits
balances in bank accounts that depositors can access on demand by using a debit card or writting a cheque
Elasticity
a measure of the resposiveness of quantity demanded or quantity supplied to one of its determinants
