Chapter 2 Flashcards
Economics
The study of how society chooses to employ resources to produce goods and services and distribute them
Macroeconomics
Whole economy
Microeconomics
Behavior of people and business for products and services
Resource Development
The study of how to increase resources and to create better conditions
Invisible Hand
A phrase by Adam Smith used to describe the process that turns a self-directed gain into social and economic benefits for all
Capitalism
All or most factors of production and distribution are privately owned and operated for profit
State Capitalism
A combo of freer markets and some government control
Supply
Quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
Demand
Quantity of products that people are willing to buy at different prices at a specific time
Market Price
The price determined by supply and demand
Equilibrium Point
The place where quantity demanded and quantity supplied meet
Perfect Competition
The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product
Monopolistic Competition
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
Oligopoly
The degree of competition in which just a few sellers dominate the market
Monopoly
The degree of competition in which only one seller controls the total supply of a product or service and sets the price
Socialism
An economic system based on the premise that some if not most businesses should be owned by the government. So that profits can be more evenly distributed among the people
Brain Drain
Loss of the best and brightest people to other countries
Communism
An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
Free-market Economies
Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows
Command Economies
Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow
Mixed Economies
Economic systems in which some allocation of resources is made by the market and some by the government
Gross Domestic Product (GDP)
Total value of final goods and services produced in a country in a given year
Gross Output (GO)
A Measure of total sales volume at all stages of production
Unemployment Rate
Number of civilians at leat 16 years old who are unemployed and tried to find a job within the prior four weeks
Inflation
General rise in the prices of goods and services over time
Disinflation
A situation in which prices are declining
Stagflation
A situation when the economy is slowing but the prices are going up anyhow
Consumer Price Index (CPI)
Monthly statistics that measure the pace of inflation or deflation
Core Inflation
CPI minus food and energy costs
Producer Price Index (PPI)
Index that measures prices at the wholesale level
Business Cycles
The periodic rises and falls that occur
Recession
Two or more consecutive quarters of decline in the GDP
Depression
A severe recession, usually accompanied by deflation
Fiscal Policy
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending
National Dept
Sum of government deficits over time
Monetary Policy
The management of the money supply and interest rates by the Federal Reserve
