Chapter 3 Flashcards
Balanced Budget
Situation in which total revenues raised by taxes equal the total proposed spending for the year.
Budget
Organization’s plan for how it will raise and spend money during a given period of time
Budget Deficit
Situation in which the government spends more than the amount of money it raises through taxes.
Budget surplus
Excess funding that occurs when government spends less than the amount of funds raised through taxes and fees
Capitalism
Economic system that rewards companies for their ability to perceive and serve the needs and demands of consumers; also called the private enterprise system
Consumer Price Index (CPI)
Measurement of the monthly average change in prices of goods and services
Core Inflation Rate
Inflation rate of an economy after energy and food prices are removed.
Cyclical Unemployment
People who are out of work because of a cyclical contraction in the economy
Deflation
Opposite of inflation, occurs when prices continue to fall
Demand
Willingness and ability of buyers to purchase goods and services
Demand Curve
Graph of the amount of a product that buyers will purchase at different prices
Economics
Social science that analyzes the choices people and government make in allocating scarce resources.
Equilibrium Price
Prevailing market price at which you can buy an item.
Expansionary Monetary Policy
Government actions to increase the money supply in an effort to cut the cost of borrowing, which encourages business decision makers to make new investments, in turn stimulating employment and economic growth.
Fiscal Policy
Government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.
Frictional Unemployment
Applies to members of the workforce who are temporarily not working but are looking for jobs
Gross Domestic Product (HDP)
Sum of all goods and services produced within a country’s boundaries during a specific time period, such as a year.
Hyperinflation
Economic situation characterized by soaring prices
Inflation
Economic situation characterized by rising prices caused by a combination of excess consumer demand and increases in the costs of raw materials, components parts, human resources, and other factors of production.
Macroeconomics
Study of a nation’s overall economic issues, such as how an economy maintains and allocates resources and how a government’s policies affect the standards of living of its citizens
Microeconomics
Study of small economic units, such as individual consumers, families, and businesses
Mixed Market Economies
Economic system that draws from both types of economies, to different degrees
Monetary Policy
Government actions to increase or decrease the money supply and change banking requirements and interest rates to influence bankers’ willingness to make loans.
Monopolistic Competition
Market structure in which large numbers of buyers and sellers exchange heterogeneous products so each participant has some control over price
Monopoly
Market situation in which a single seller dominates trade in a good or service for which buyers can find no close substitutes
National Debt
Money owed by government to individuals, businesses, and government agencies who purchase Treasury bills, Treasure notes, and Treasury bonds sold to cover expenditures.
Oligopoly
Market situation in which relatively few sellers compete and high start-up costs from barriers to keep out new competitors.
Planned Economy
Economic system in which government controls determine business ownership, profits, and resource allocation to accomplish government goals rather than those set by individual firms
Privatization
Conversion of government-owned and operated companies into privately held businesses
Productivity
Relationship between the number of units produced and the number of human and other production inputs necessary to produce them
Pure Competition
Market structure, in which large numbers of buyers and sellers exchange homogeneous products and no single participant has a significant influence on price
Recession
Cyclical economic contraction that lasts for six months or longer
Regulated Monopolies
Market situation in which a local, state, or federal government grants exclusive rights in a certain market to a single firm
Restrictive Monetary Policy
Government actions to reduce the money supply to curb rising prices, overexpansion, and concerns about overly rapid economic growth.
Seasonal Unemployment
Joblessness of workers in a seasonal industry
Socialism
Economic system characterized by government ownership and operation of major industries such as communications
Structure Unemployment
People who remain unemployed for long periods of time, often with little hope of finding new jobs like their old ones
Supply
Willingness and ability of sellers to provide goods and services
Supply Curve
Graph that shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand
Unemployment Rate
Percentage of the total workforce actively seeking work by currently unemployed
