Terms : Hide Images
| 6681812649 | absolute advantage | the ability to produce something more efficiently | 0 | |
| 6681812650 | capital | productive equipment or machinery | 1 | |
| 6681812651 | comparative advantage | the ability to produce something with a lower opportunity cost | 2 | |
| 6681812652 | economics | a social science that studies how resources are used and is often concerned with how resources can be used to their fullest potential | 3 | |
| 6681812653 | efficiency | using resources to their maximum potential | 4 | |
| 6681812654 | labor | all human activity that is productive | 5 | |
| 6681812655 | land | all natural resources | 6 | |
| 6681812656 | 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 | 7 | |
| 6681812657 | macroeconomics | economic problems encountered by the nation as a whole | 8 | |
| 6681812658 | microeconomics | economic problems faced by individual units within the overall company | 9 | |
| 6681812659 | opportunity cost | the amount of one good that must be sacrificed to obtain an alternative good | 10 | |
| 6681812660 | positive economics | economic analysis that draws conclusions based on logical deduction or induction (value judgements are avoided) | 11 | |
| 6681812661 | production possibilities curve | the combinations of two goods that can be produced if the economy uses all of its resources fully and efficiently | 12 | |
| 6681812662 | normative economies | economies involving value judgement | 13 | |
| 6681812663 | resource | anything that can be used to produce a good or service | 14 | |
| 6681812664 | allocative efficiency | term for resources being deployed to produce just the right amount of each product to satisfy society's wants | 15 | |
| 6681812665 | capitalism | an economic system where supply and demand determine prices | 16 | |
| 6681812666 | circular flow diagram | diagram that shows how households and firms are related by the exchange of resources and products | 17 | |
| 6681812667 | command economy | economy in which the central government dictates what will or will not be produced and who gets what | 18 | |
| 6681812668 | the law of demand | law that states that when the price of a product increases, the quantity demanded decreases, ceteris paribus | 19 | |
| 6681812669 | law of supply | law that states that when the price of a product increases, the quantity supplied increases, ceterus paribus | 20 | |
| 6681812670 | mixed economy | a blend of government commands and capitalism | 21 | |
| 6681812671 | consumption expenditures | all the goods and services sold to households | 22 | |
| 6681812672 | disposable personal income (DPI) | the income of households after taxes have been paid | 23 | |
| 6681812673 | government expenditures | goods and services sold to governments | 24 | |
| 6681812674 | gross domestic product (GDP) | dollar value of production within a nation's borders | 25 | |
| 6681812676 | intermediate sales | sales to firms that will incorporate the item into their final product | 26 | |
| 6681812678 | investment expenditures | expenditures by businesses on plants and equipment plus the change in business inventories | 27 | |
| 6681812679 | national income (NI) | the income earned by households and profits earned by firms after subtracting depreciation and indirect business taxes | 28 | |
| 6681812681 | net exports | exports minus imports | 29 | |
| 6681812682 | personal income (PI) | income received by households | 30 | |
| 6681812683 | real GDP | GDP adjusted for the price changes | 31 | |
| 6681812684 | underground economy | all the illegal production of goods and services and legal production that does not pass through markets | 32 | |
| 6681812685 | GDP | C+I+G+X | 33 | |
| 6681812686 | GDP per capita | GDP/population | 34 | |
| 6681812687 | 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 | 35 | |
| 6681812688 | cyclical unemployment | loss of jobs by individuals during a recession and the corresponding slowdown in production | 36 | |
| 6681812689 | Fisher equation | Nominal Interest Rate= Real Interest Rate + Expected Inflation | 37 | |
| 6681812690 | frictional unemployment | state of being out of work because the person is in between jobs | 38 | |
| 6681812691 | GDP deflator or Price Index | measure of the level of prices in the economy | 39 | |
| 6681812693 | inflation | a sustained rise in most prices in the economy | 40 | |
| 6681812697 | structural unemployment | state of being out of work because the economy is structured, or set up, to a person's disadvantage | 41 | |
| 6681812698 | unemployment rate | the number of unemployed persons divided by the labor force | 42 | |
| 6681812699 | CPI | (Total Cost this Period/Total Cost Base Period) x 100 | 43 | |
| 6681812700 | Inflation rate | [(this period CPI-previous period CPI)/previous period CPI] x 100 | 44 | |
| 6681812702 | Real GDP | (GDP/GDP deflator) x 100 | 45 | |
| 6681812703 | Nominal Interest Rate | Real Interest Rate + Expected Inflation | 46 | |
| 6681812704 | Unemployment Rate | Number of unemployed/civilian labor force | 47 | |
| 6681812705 | aggregate demand | the demand for all goods and services by all households, business, governments, and foreigners | 48 | |
| 6681812706 | aggregate supply | the supply of all goods and services by all producers in the economy | 49 | |
| 6681812708 | business cycle | a wave of economic activity comprised of an expansion and a recession | 50 | |
| 6681812709 | classical economic theory | the predominant paradigm in economic analysis from about 1800 until 1930, based on Say's Law | 51 | |
| 6681812711 | equilibrium price level | the price level that equates aggregate supply and aggregate demand, the average level of prices in the economy | 52 | |
| 6681812712 | 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 | 53 | |
| 6681812713 | recovery | a sustained improvement in economic activity | 54 | |
| 6681812714 | Keynesian theory | theory that opposes Classical theory by emphasizing the short run and focusing on economies that are operating below full capacity | 55 | |
| 6681812715 | marginal propensity to consume (MPC) | idea that given an extra dollar, how much is spent? | 56 | |
| 6681812716 | multiplier | an initial change in spending in the economy that will have a magnified, or multiplied, effect on income | 57 | |
| 6681812717 | recession | a sustained decline in economic activity | 58 | |
| 6681812718 | Say's Law | theory that supply creates its own demand | 59 | |
| 6681812719 | MPC | change in spending / change in income | 60 | |
| 6681812720 | Spending Multiplier | 1/MPS | 61 | |
| 6681812721 | total change in income | Initial Change in Spending x Multiplier | 62 | |
| 6681812722 | automatic stabilizers | government policies already in place that promote deficit spending during recessions and surplus budgets during expansions | 63 | |
| 6681812723 | crowding out | the increase in interest rates and subsequent decline in spending that occurs when the government borrows money to finance a deficit | 64 | |
| 6681812724 | deficit | situation that exists when government spending exceeds tax revenues | 65 | |
| 6681812725 | fiscal policy | changes in government spending and taxes to fight recessions or inflations | 66 | |
| 6681812726 | inflationary gap | what occurs when the equilibrium quantity of output is above potential output | 67 | |
| 6681812727 | Phillips curve | the inverse relationship between inflation and unemployment | 68 | |
| 6681812728 | rational expectations | the idea that households and businesses will make economic decisions that might offset intended policy goals | 69 | |
| 6681812729 | recessionary gap | what occurs when the equilibrium quantity of output is below potential output | 70 | |
| 6681812730 | stagflation | term used to describe the situation when the economy experiences inflation and a recession simultaneously | 71 | |
| 6681812731 | surplus | spending by the government that is less than tax revenues | 72 | |
| 6681812732 | change in real GDP | Initial Change in Spending x Multiplier | 73 | |
| 6681812734 | currency | coins and paper money | 74 | |
| 6681812735 | discount rate | the rate of interest the FED charges when it makes loans to depository institutions | 75 | |
| 6681812736 | 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 | 76 | |
| 6681812737 | The Federal Reserve | the central bank of the United The United States | 77 | |
| 6681812738 | fiat money | money that is not backed by any precious commodity | 78 | |
| 6681812740 | liquidity | the ability to turn an asset into cash rapidly and without loss | 79 | |
| 6681812741 | M1 | currency, transaction accounts, and travelers' checks | 80 | |
| 6681812742 | M2 | M1 plus savings accounts, certificates of deposit, and other liquid assets | 81 | |
| 6681812743 | money | anything that society generally accepts in payment for a good or service | 82 | |
| 6681812744 | money multiplier | 1/reserve requirement, the multiple by which the money supply will change because of a change in bank reserves | 83 | |
| 6681812745 | open market operations | activities in which the FED buys and sells government securities in the secondary market | 84 | |
| 6681812746 | required reserves | the amount of any deposit that must be held aside and not used to make loans or buy investment | 85 | |
| 6681812747 | reserve requirement | the percentage of any deposit that must be held aside and not used to amke loans or buy investments | 86 | |
| 6681812751 | money multiplier | 1/ Reserve Requirement | 87 | |
| 6681812752 | change in money supply | Money Multiplier x Change in Bank Reserves | 88 | |
| 6681812756 | federal open market committee (FOMC) | a committee within the FED that designs and executes the particular of monetary policy | 89 | |
| 6681812757 | monetarist | one who believes that changes in the money supply have a profound effect on the economy | 90 | |
| 6681812759 | monetary policy | changes in the money supply to fight recessions or inflations | 91 | |
| 6681812761 | velocity of money | describing the number of times the typical dollar of M1 or M2 is used to make purchases during a year | 92 | |
| 6681812762 | equation of exchange | M x V = P x Q | 93 | |
| 6681812764 | economic growth | growth of output usually measured by the percentage change in real GDP or real GDP per capita | 94 | |
| 6681812765 | human capital | the skill and knowledge embodied in the labor force | 95 | |
| 6681812767 | potential GDP | the amount that can be produced using resources fully and efficiently | 96 | |
| 6681812770 | Rule of 70 | years it takes a variable to double =70/the annual growth rate of the variable | 97 | |
| 6681812771 | appreciation | the increase of the value of a currency in terms of another currency | 98 | |
| 6681812772 | 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 | 99 | |
| 6681812773 | balance of trade | a nation's exports minus its imports | 100 | |
| 6681812774 | financial 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 | 101 | |
| 6681812775 | closed economy | a hypothetical economy with no foreign trade | 102 | |
| 6681812776 | current account | a portion of the balance of payments comprised of the trade balance, net investment income, and net transfers | 103 | |
| 6681812777 | depreciation | the decrease of the value of a currency in terms of another currency | 104 | |
| 6681812779 | exchange rate | the value of one country's currency in terms of another's | 105 | |
| 6681812781 | import quota | a limit on the amount of a product that can be imported | 106 | |
| 6681812782 | import tariff | a tax on a specified import product | 107 | |
| 6681812788 | official reserves | government's holdings of foreign currencies | 108 | |
| 6681812789 | open economy | an economy with foreign trade | 109 | |
| 6681812790 | trade deficit | excess of a nation's imports over its exports | 110 | |
| 6681812791 | trade surplus | excess of a nation's exports of over its imports | 111 | |
| 6681812792 | balance of payments | current account +capital account | 112 |
