Chapter 2: The Economy: Myth and Reality - Vocab

Question 1

Define Inputs

Answer 1

Inputs or factors of production are the labour, machinery, buildings, and natural resources used to make outputs.

Question 2

Define Outputs

Answer 2

The outputs of a firm or economy are the goods and services it produces.

Question 3

Define GDP

Answer 3

Gross Domestic Product.

The sum of the money values of all final goods and services produced in the domestic economy and sold on organised markets during a specified period of time, usually a year.

Question 4

Define Open Economy

Answer 4

An economy that traded with other nations in goods and services, and perhaps also trades in financial assets.

Question 5

Define Closed Economy

Answer 5

A closed economy is one that does not trade with other nations in either goods or assets.

Question 6

Define Recession

Answer 6

A recession is a period of time in which the total output of the economy declines.

Question 7

Define Transfer Payments

Answer 7

Sums of money that the government gives certain individuals as outright grants rather that as payments for services rendered to employers.

Question 8

Define Progressive Tax

Answer 8

A progressive tax os one in which the average tax rate paid by an individual rises as income rises.

Question 9

Define Mixed Economy

Answer 9

An economy with some public influence over the workings of free markets.