Unit 5 Vocab

Question 1

The difference between a country’s total exports and total imports. Also known as “net exports”

Answer 1

Balance of Trade

Question 2

The 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.

Answer 2

Business Cycle

Question 3

An economic system where the government owns the resources and decides what goods and services are produced, how they are produced, and who gets them. The government decides the prices of goods, services, and resources.

Answer 3

Command Economy

Question 4

The ability to produce at a lower opportunity cost than another producer.

Answer 4

Comparative Advantage

Question 5

Actions taken by the Federal Reserve to increase interest rates and thereby discourage spending by consumers and businesses.

Answer 5

Contractionary Policy

Question 6

A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Answer 6

Consumer Price Index (CPI)

Question 7

Unemployment associated with recessions in the business cycle.

Answer 7

Cyclical Unemployment

Question 8

The quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period.

Answer 8

Demand

Question 9

A government order that limits or prohibits trade with a particular country or group of countries.

Answer 9

Embargo

Question 10

The price at which quantity supplied and quantity demanded are equal. The point at which the supply and demand curves intersect

Answer 10

Equilibrium Price

Question 11

Actions taken by the Federal Reserve to lower interest rates and thereby encourage spending by consumers and businesses.

Answer 11

Expansionary Policy

Question 12

The spread of the flow of financial products, goods, technology, information, and jobs across national borders and cultures.

Answer 12

Globalization

Question 13

A general, sustained upward movement of prices for goods and services in an economy.

Answer 13

Inflation

Question 14

Spending and taxing policies of the federal government to influence the economy.

Answer 14

Fiscal Policy

Question 15

Unemployment that results when people are new to the job market (for example, recent graduates) or are transitioning from one job to another.

Answer 15

Frictional Unemployment

Question 16

The advocacy of monetary and fiscal programs by government to increase employment and spending

Answer 16

Keynesian Economics

Question 17

An economic system in which decisions about what goods and services are produced, how they are produced, and who gets them are made by buyers and sellers who meet to exchange goods, services, and resources. The buyers and sellers decide the prices of goods, services, and resources.

Answer 17

Market Economy

Question 18

An economic system where some decisions about what is produced, how it is produced, who gets what is produced, and prices of what is produced are made by buyers and sellers. Some decisions about what is produced, how it is produced, who gets what is produced, and prices of what is produced are determined by the government.

Answer 18

Mixed Economy

Question 19

Central bank actions involving the use of interest rate or money supply tools to achieve such goals as maximum employment and stable prices.

Answer 19

Monetary Policy

Question 20

The total market value of all final goods and services produced in an economy in a given year, expressed using the current year’s price for goods and services. Also known as current-dollar GDP.

Answer 20

Nominal GDP

Question 21

The value of the next-best alternative when a decision is made; it’s what is given up.

Answer 21

Opportunity Cost

Question 22

Gross domestic product (GDP) divided by the total population of a country.

Answer 22

Per Capita GDP

Question 23

A graphic representation of output combinations that can be produced given an economy’s available resources and technology.

Answer 23

Production Possibility Curve

Question 24

The total market value of all final goods and services produced in an economy in a given year calculated by using a base year’s price for goods and services; nominal gross domestic product (GDP) adjusted for inflation.

Answer 24

Real GDP

Question 25

A period of declining real income and rising unemployment. A significant decline in general economic activity extending over a period of time.

Answer 25

Recession

Question 26

Penalities levied against a country, its officials or private citizens, either as punishment or in effort to provide discentives for the targeted policies and actions

Answer 26

Sanction

Question 27

The condition that exists because there are not enough resources to produce everyone’s wants.

Answer 27

Scarcity

Question 28

Any various egalitarian economic theories or movements advocating collective or governmental ownership and administration of the means of production and distribution of goods

Answer 28

Socialist Economy

Question 28

Long-term joblessness caused by a mismatch in the skills held by those looking for work and the skills demanded by those seeking workers.

Answer 28

Structural Unemployment

Question 29

The quantity of a good or service that producers are willing and able to sell at all possible prices during a certain time period.

Answer 29

Supply

Question 30

A theory that maintains that increasing the supply of goods and services is the engine of economic growth. Addionally it advocates tax cuts as a way to encourage job creation, business expansion, and entrepreneurial activity

Answer 30

Supply Side Economics

Question 31

A tax that must be paid before a good may be brought into a country

Answer 31

Tariff

Question 32

A basic economic system where customs and traditions are the elements that determine the way trade and commerce are performed

Answer 32

Traditional Economy