econ 2 quiz Flashcards
factors of production
Inputs used to produce a good or service in order to produce income.
- Land, labor, capital, entrepreneurship
market economies
Economic system where supply and demand direct the production of goods and services.
planned economies
Economic system where the industry is controlled by the government, and they make the decisions about what to do with the money made.
invisible hand
Adam Smith: Individual self-interest in a free market leads to overall societal benefits.
circular flow model
Economic model that presents how money, goods, and services move between sectors in an economic system.
voluntary exchange
free and unregulated exchange of goods and services
competition
Process by which various sellers try to offer better products, lower prices, and other advantages to choosing their products over a rivals.
principal
Original sum of money that’s borrowed in a loan or placed into an investment.
interest
Charge for borrowing money.
fixed rate interest
Unchanging rate charged on a liability, like a loan or mortgage.
variable rate interest
Interest rate on a loan or security that fluctuates over time.
macroeconomics
Part of economics concerned with large scale / general economic factors.
nominal gdp
Market value of all goods and services produced in a country’s economy over a given period, without inflation.
real gdp
Market value of all goods and services produced in a country’s economy over a given period, adjusted with inflation.
per capita gdp
GDP divided by the midyear population.
business cycle
Fluctuating levels of economic activity in an economy over a period of time measured from the beginning of one recession to the beginning of the next.
expansion
Upward trend in business cycle. Increase in production and employment.
recession
Sustained period of negative growth in GDP with rise in unemployment rate.
frictional unemployment
Unemployment caused by people being in the process of moving from one job to another.
structural unemployment
Unemployment caused when workers skills do not match jobs available.
cyclical unemployment
Unemployment caused by changes in the business cycle
natural unemployment rate
Unemployment rate that persists in a well functioning, healthy economy.
productivity
measure of how efficiently an economy produces goods and services.
inflation
the rate at which prices for goods and services increase over time
deflation
sustained decrease in the prices of goods and services across an economy
human capital
economic value of a worker’s skills and experience.
labor force
total number of people in a population who are working or looking for work
labor supply
the hours an employee is willing to work initially increases as wages increase
labor demand
number of workers a firm, industry, or economy is willing to hire at a given time and wage rate
collective bargaining
process where employees and their chosen union representatives negotiate with their employer to determine terms of employment
labor unions
association of workers who bargain collectively with their employer regarding the terms and conditions of employment
minimum wage
the lowest legal amount an employer can pay an employee for their work
