Terms : Hide Images
| 67696385 | absolute advantage | the ability to produce something more efficiently | |
| 67696386 | capital | productive equipment or machinery | |
| 67696387 | comparative advantage | the ability to produce something with a lower opportunity cost | |
| 67696388 | economics | a social science that studies how resources are used and is often concerned with how resources can be used to their fullest potential | |
| 67696389 | efficiency | using resources to their maximum potential | |
| 67696390 | labor | all human activity that is productive | |
| 67696391 | land | all natural resources | |
| 67696392 | law of Increasing costs | law that states that when more of a product is initially being produced, the higher the opportunity cost will be to produce still more | |
| 67696393 | macroeconomics | economic problems encountered by the nation as a whole | |
| 67696394 | microeconomics | economic problems faced by individual units within the overall company | |
| 67696395 | opportunity cost | the amount of one good that must be sacrificed to obtain an alternative good | |
| 67696396 | positive economics | economic analysis that draws conclusions based on logical deduction or induction (value judgements are avoided) | |
| 67696397 | production possibilities frontier | the combinations of two goods that can be produced if the economy uses all of its resources fully and efficiently | |
| 67696398 | normative economies | economies involving value judgement | |
| 67696399 | resource | anything that can be used to produce a good or service | |
| 67696400 | allocative efficiency | term for resources being deployed to produce just the right amount of each product to satisfy society's wants | |
| 67696401 | capitalism | an economic system where supply and demand determine prices | |
| 67696402 | circular flow diagram | diagram that shows how households and firms are related by the exchange of resources and products | |
| 67696403 | command economy | economy in which the central government dictates what will or will not be produced and who gets what | |
| 67696404 | the law of demand | law that states that when the price of a product increases, the quantity demanded decreases, ceteris paribus | |
| 67696405 | law of supply | law that states that when the price of a product increases, the quantity supplied increases, ceterus paribus | |
| 67696406 | mixed economy | a blend of government commands and capitalism | |
| 67696407 | consumption expenditures | all the goods and services sold to households | |
| 67696408 | disposable personal income (DPI) | the income of households after taxes have been paid | |
| 67696409 | government expenditures | goods and services sold to governments | |
| 67696410 | gross domestic product (GDP) | dollar value of production within a nation's borders | |
| 67696411 | gross national product (GNP) | dollar value of production by a country's citizens | |
| 67696412 | intermediate sales | sales to firms that will incorporate the item into their final product | |
| 67696413 | investment sales | sales to firms that will incorporate the item into their final product | |
| 67696414 | investment expenditures | expenditures by businesses on plants and equipment plus the change in business inventories | |
| 67696415 | national income (NI) | the income earned by households and profits earned by firms after subtracting depreciation and indirect business taxes | |
| 67696416 | national income and product accounts (NIPA) | a comprehensive group of statistics that measures various aspects of the economy's performance | |
| 67696417 | net exports | exports minus imports | |
| 67696418 | personal income (PI) | income received by households | |
| 67696419 | real GDP | GDP adjusted for the price changes | |
| 67696420 | underground economy | all the illegal production of goods and services and legal production that does not pass through markets | |
| 67696421 | GDP | C+I+G+X | |
| 67696422 | GDP per capita | GDP/population | |
| 67696423 | consumer price index (CPI) | measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services | |
| 67696424 | cyclical unemployment | loss of jobs by individuals during a recession and the corresponding slowdown in production | |
| 67696425 | fisher's hypothesis | Nominal Interest Rate= Real Interest Rate + Expected Inflation | |
| 67696426 | frictional unemployment | state of being out of work because the person is in between jobs | |
| 67696427 | GDP deflator | measure of the level of prices in the economy | |
| 67696428 | hidden unemployment | describing those who are able to work but who are not actively seeking employment because they are discouraged about their prospects for finding employment | |
| 67696429 | inflation | a sustained rise in most prices in the economy | |
| 67696430 | menu cost | the misallocation of resources because of inflation | |
| 67696431 | nonaccelerating inflation rate of unemployment | the full employment rate of unemployment; when employment falls below this rate, inflation accelerates | |
| 67696432 | seasonal unemployment | state of being out of work because of the time of year | |
| 67696433 | structural unemployment | state of being out of work because the economy is structured, or set up, to a person's disadvantage | |
| 67696434 | unemployment rate | the number of unemployed persons divided by the labor force | |
| 67696435 | CPI | (Total Cost this Period/Total Cost Base Period) x 100 | |
| 67696436 | Inflation rate | [(this period CPI-previous period CPI)/previous period CPI] x 100 | |
| 67696437 | GDP deflator | (GDP/Real GPD) x 100 | |
| 67696438 | Real GDP | (GDP/GDP deflator) x 100 | |
| 67696439 | Nominal Interest Rate | Real Interest Rate + Expected Inflation | |
| 67696440 | Unemployment Rate | Number of unemployed/civilian labor force | |
| 67696441 | aggregate demand | the demand for all goods and services by all households, business, governments, and foreigners | |
| 67696442 | aggregate supply | the supply of all goods and services by all producers in the economy | |
| 67696443 | break-even point | point where the consumption function crosses the 45 degree line and income equals spending so that saving is zero | |
| 67696444 | business cycle | a wave of economic activity comprised of an expansion and a recession | |
| 67696445 | classical economic theory | the predominant paradigm in economic analysis from about 1800 until 1930, based on Say's Law | |
| 67696446 | consumption theory | the relationship between consumer spending and income | |
| 67696447 | equilibrium price level | the price level that equates aggregate supply and aggregate demand, the average level of prices in the economy | |
| 67696448 | equilibrium quantity | the amount of output that results in no shortage or surplus, the amount of goods and service bought and sold in the economy | |
| 67696449 | expansion | a sustained improvement in economic activity | |
| 67696450 | Keynesian theory | theory that opposes Classical theory by emphasizing the short run and focusing on economies that are operating below full capacity | |
| 67696451 | marginal propensity to consume (MPC) | idea that given an extra dollar, how much is spent? | |
| 67696452 | multiplier | an initial change in spending in the economy that will have a magnified, or multiplied, effect on income | |
| 67696453 | recession | a sustained decline in economic activity | |
| 67696454 | Say's Law | theory that supply creates its own demand | |
| 67696455 | MPC | change in spending / change in income | |
| 67696456 | Multiplier | 1/(1-MPC) | |
| 67696457 | total change in income | Initial Change in Spending x Multiplier | |
| 67696458 | automatic stabilizers | government policies already in place that promote deficit spending during recessions and surplus budgets during expansions | |
| 67696459 | crowding out | the increase in interest rates and subsequent decline in spending that occurs when the government borrows money to finance a deficit | |
| 67696460 | deficit | situation that exists when government spending exceeds tax revenues | |
| 67696461 | fiscal policy | changes in government spending and taxes to fight recessions or inflations | |
| 67696462 | inflationary gap | what occurs when the equilibrium quantity of output is above potential output | |
| 67696463 | Phillips tradeoff | the inverse relationship between inflation and unemployment | |
| 67696464 | rational expectations | the idea that households and businesses will use all the information available to them when making economic decision | |
| 67696465 | recessionary gap | what occurs when the equilibrium quantity of output is below potential output | |
| 67696466 | stagflation | term used to describe the situation when the economy experiences inflation and a recession simultaneously | |
| 67696467 | surplus | spending by the government that is less than tax revenues | |
| 67696468 | change in real GDP | Initial Change in Spending x Multiplier | |
| 67696469 | certificate of deposit | debt instrument that is similar to a savings account except the interest rate is slightly greater and the deposit cannot be drawn on without penalty | |
| 67696470 | currency | coins and paper money | |
| 67696471 | discount rate | the rate of interest the FED charges when it makes loans to depository institutions | |
| 67696472 | excess reserves | the amount of any deposit that does not have to be held aside and may be used to make loans and buy investments | |
| 67696473 | federal reserves | the central bank of the United The United States | |
| 67696474 | fiat money | money that is not backed by any precious commodity | |
| 67696475 | government securities | IOUs that the government issues when it borrows money | |
| 67696476 | liquidity | the ability to turn an asset into cash rapidly and without loss | |
| 67696477 | M1 | currency, transaction accounts, and travelers' checks | |
| 67696478 | M2 | M1 plus savings accounts, certificates of deposit, and other liquid assets | |
| 67696479 | money | anything that society generally accepts in payment for a good or service | |
| 67696480 | money multiplier | 1/reserve requirement, the multiple by which the money supply will change because of a change in bank reserves | |
| 67696481 | open market operations | activities in which the FED buys and sells government securities in the secondary market | |
| 67696482 | required reserves | the amount of any deposit that must be held aside and not used to make loans or buy investment | |
| 67696483 | reserve requirement | the percentage of any deposit that must be held aside and not used to amke loans or buy investments | |
| 67696484 | savings account | an account at a depository institution that earns interest while the funds are readily available but cannot be withdrawn with checks | |
| 67696485 | secondary market | place where government securities that have already been issued may be bought or sold | |
| 67696486 | transaction account | a checking account at a bank or a similar account at some other depository institution | |
| 67696487 | money multiplier | 1/ Reserve Requirement | |
| 67696488 | change in money supply | Money Multiplier x Change in Bank Reserves | |
| 67696489 | board of governors | executive board of the FED that makes major monetary policy decisions | |
| 67696490 | demand management policy | monetary and fiscal policy | |
| 67696491 | equation of exchange | M x V = P x Q; the money supply times its velocity equals the price level times output | |
| 67696492 | federal open market committee (FOMC) | a committee within the FED that designs and executes the particular of monetary policy | |
| 67696493 | monetarist | one who believes that changes in the money supply have a profound effect on the economy | |
| 67696494 | monetary neutrality | policy in which a change in the money supply would result in a proportional change in prices while real variables, such as the unemployment rate, would be unaffected | |
| 67696495 | monetary policy | changes in the money supply to fight recessions or inflations | |
| 67696496 | money demand | the amount that households and firms want to hold in currency and deposits | |
| 67696497 | velocity of money | describing the number of times the typical dollar of M1 or M2 is used to make purchases during a year | |
| 67696498 | equation of exchange | M x V = P x Q | |
| 67696499 | capital productivity | the amount of output per unit of plant and equipment | |
| 67696500 | economic growth | growth of output usually measured by the percentage change in real GDP or real GDP per capita | |
| 67696501 | human capital | the skill and knowledge embodied in the labor force | |
| 67696502 | labor productivity | the amount of output per unit of labor | |
| 67696503 | potential GDP | the amount that can be produced using resources fully and efficiently | |
| 67696504 | productivity | output per unit of input | |
| 67696505 | total productivity | the amount of all inputs | |
| 67696506 | Rule of 70 | years it takes a variable to double =70/the annual growth rate of the variable | |
| 67696507 | appreciation | the increase of the value of a currency in terms of another currency | |
| 67696508 | balance of payments | an accounting of the funds that flow in and out of a country comprised of the capital account and the current account | |
| 67696509 | balance of trade | a nation's exports minus its imports | |
| 67696510 | capital account | a portion of the balance of payments comprised of foreign purchases of US assets minus US purchases of foreign assets, plus the change in official reserves | |
| 67696511 | closed economy | a hypothetical economy with no foreign trade | |
| 67696512 | current account | a portion of the balance of payments comprised of the trade balance, net investment income, and net transfers | |
| 67696513 | depreciation | the decrease of the value of a currency in terms of another currency | |
| 67696514 | dumping | the practice or foreign producers selling a product in the domestic market for less than it cost to produce it | |
| 67696515 | exchange rate | the value of one country's currency in terms of another's | |
| 67696516 | gold standard | a unit of one currency that is equivalent to a stated amount of gold | |
| 67696517 | import quota | a limit on the amount of a product that can be imported | |
| 67696518 | import tariff | a tax on a specified import product | |
| 67696519 | infant industries | those industries that are just getting started, perhaps requiring trade restrictions | |
| 67696520 | intervention | situation in which a nation or group of nations uses their official reserves to supply or demand a currency in order to alter the exchange rate | |
| 67696521 | managed float | an exchange rate regime where supply and demand determine exchange rates with occasional intervention when warranted | |
| 67696522 | net investment income | amount US citizens earned as interest and dividends from abroad minus how much was paid to foreigners in interest and dividends | |
| 67696523 | net transfers | money our government and citizens send as gifts or aid to foreigners minus how much foreigners send to us in gifts and aid | |
| 67696524 | official reserves | government's holdings of foreign currencies | |
| 67696525 | open economy | an economy with foreign trade | |
| 67696526 | trade deficit | excess of a nation's imports over its exports | |
| 67696527 | trade surplus | excess of a nation's exports of over its imports | |
| 67696528 | balance of payments | current account +capital account |
