Economics Flashcards
Price Ceiling
The most a government or other organization in charge of managing the economy can charge for a product.
Trade Barriers
obstacles to trade
Laissez-Faire
Adam Smith’s idea that the government shouldn’t mess with the economy means “let the people do what they want.”
Retaliatory Tariff
when Country A places a tariff on Country B’s imports because Country B placed a tariff on Country A’s imports
Absolute Advantage
The power of an entity to make more of a good or service with the same amount of resources than another entity.
Factor Market
a market in which the factors of production are bought and sold
Equilibrium (of a Market)
when the amount sold is the same as the amount wanted
Tax
A contribution to federal or state funds that people or companies have to make.
Consumer Price Index (CPI)
A way to measure the strength of a business by looking at how much people spend.
Consumer spending
Labor Force
everyone who works and wants to work, including those who want to work but can’t find a job.
Law of Demand
As the price of a good goes up, fewer people will want to buy it.
As price increases, quantity demanded decreases
Prince Henry The Navigator
Most famous traveler who found new ways to trade with India by buying bigger and better ships.
Adam Smith
The man who started business. He wrote “An Inquiry into the Nature and Causes of the Wealth of Nations.” People have said that an invisible hand drives the business to be as productive as possible.
Perceived Value
how much a customer wants a good.
Interdependence of Economies
all economies require each other to function
The technology of a smartphone may be produced in a different country than the physical parts.
Smoot-Hawley Tariff Act
Tariffs were put on more than 20,000 imported goods in 1930 to protect American jobs, but the effect was less trade between countries.
Price Controls
A highest price that can be charged for a good, set by the government.
Microeconomics
The study of individuals and their decisions
Barrier To Entry
when problems make it hard for new companies to get into the market
Gross Domestic Product (GDP)
The amount of all the goods and services made in a country. GDP is the market value of all of a country’s finished goods and services made in one year.
Domestic Production
Black Plague / Black Death
An outbreak of the Bubonic Plague. A deadly epidemic that struck Europe in the mid-1300’s and killed millions.
Comparative Advantage
The power of a person or business to make a good or service for less money than another person or business.
Dividends
shares of the money made
Trade Deficit
buying more than they are selling
Demand
The amount of a good that people want to buy at a certain time in a market.
Supply Side Economics / Reaganomics
the idea that when the government gets involved in trade, it should focus on making it easier for sellers to make things. The 1980s were ruled by this strategy.
Scarcity
Economics term for the fact that there aren’t enough resources to meet all of people’s needs and wants.
Stock Market
the place where people can buy and sell company shares
Specialization
A tendency for groups to specialize in areas where they can make the best product for the most money (comparative advantage) and buy other goods through trade.
Economies of Scale
a lower price per unit of production that comes from making more at once.
Buying raw materials in bulk at a discount, thereby decreasing the per-unit cost
Cost-Benefit Analysis
Think about what you gain and lose from your business choices.
If a person needs to study and wants to watch television, they may choose to study because the benefit of studying is more valuable than the disappointment of missing out on tv.
Purchasing Power
the ability to buy goods
Traditional Economy
A type of economy in which most goods are made for use by one’s own family and only the most basic goods are sold or bartered.
Dutch East India Company
One of the first companies with shares of ownership
Competition (Economics)
Companies will try to get a bigger part of the market by making goods that are better and cheaper.
Disequilibrium (of a Market)
when either the amount offered or the amount wanted is more than the other.
Macroeconomics
How the business as a whole is made and how it works
Circular Flow
Goods, services, and money move from customers to producers and back again in an economy.
Command Economy
The business is run by the government, which decides what should be made and how much should be made. Communism is most often linked to this kind of business.
OPEC (Organization of the Petroleum Exporting Countries)
A group of countries that produce most of the world’s oil and work together on foreign issues. The current member states are spread all over the world, from South America to central Africa, but most of them are in the Middle East.
Market Economy
A type of economy in which production, consumption, and investment choices are based on the prices of goods and services, which are set by the laws of supply and demand.
Means of Production
The things that aren’t people that are used to make things in a market
Joint-Stock Company
A company whose shares are owned by a group of people.
Subsidies
Payments from the government to a business to lower costs or create false demand
Employment Percentage
The number of people who are working in a market.
Trade
the trade of goods for money between two or more groups
Supply
The amount of a good that an economy makes at a certain time
Exporting
selling to other countries
Surplus
when the amount offered is more than what was asked for
Deficit
when the amount wanted is more than what is available
Importing
buying from other countries
Trade Cap
A limit on how much of a good can be brought in or sent out.
Mixed Economy
a market economy with different amounts of government involvement
Share
a small amount of the business
Free Trade
the ability for one country to trade freely with another so that all things can be made as efficiently as possible.
Spindletop
In 1901, an oil derrick in Beaumont, Texas, was the most productive one in the world. It was able to pump more than 100,000 barrels of oil a day, which led to a boom in the oil and gas business in Texas.
Specialization of Labor / Division of Labor
A tendency for groups to specialize in areas where they can make the best product for the most money (comparative advantage) and buy other goods through trade.
Law of Supply
As the price of a good goes up, more of that good will be made available.
As price increases, quantity supplied increases
Tariff
a tax on a certain type of good that is brought into or out of the country
North American Free Trade Agreement (NAFTA)
A trade deal between the US, Canada, and Mexico that set up a free trade zone
Invisible Hand
The idea that there is no one in charge of the business and that people act in their own best interests.
Opportunity Cost
The cost of the next best chance a person gives up when they make a business choice
Keynesian Economics
Free markets can make the economy less efficient, while government action can make it more safe and productive.
Factors of Production
Land, labor, capital, and entrepreneurship are what decide when and where economic action can and most likely will happen.
Price Control
A maximum or minimum price cap set by the government for a good
