Terms : Hide Images
| 13885257930 | absolute advantage | the ability to produce something more efficiently | 0 | |
| 13885257931 | capital | productive equipment or machinery | 1 | |
| 13885257932 | comparative advantage | the ability to produce something with a lower opportunity cost | 2 | |
| 13885257933 | 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 | |
| 13885257934 | efficiency | using resources to their maximum potential | 4 | |
| 13885257935 | labor | all human activity that is productive | 5 | |
| 13885257936 | land | all natural resources | 6 | |
| 13885257937 | 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 | |
| 13885257938 | macroeconomics | economic problems encountered by the nation as a whole | 8 | |
| 13885257939 | microeconomics | economic problems faced by individual units within the overall company | 9 | |
| 13885257940 | opportunity cost | the amount of one good that must be sacrificed to obtain an alternative good | 10 | |
| 13885257941 | positive economics | economic analysis that draws conclusions based on logical deduction or induction (value judgements are avoided) | 11 | |
| 13885257942 | production possibilities frontier | the combinations of two goods that can be produced if the economy uses all of its resources fully and efficiently | 12 | |
| 13885257943 | normative economies | economies involving value judgement | 13 | |
| 13885257944 | resource | anything that can be used to produce a good or service | 14 | |
| 13885257945 | allocative efficiency | term for resources being deployed to produce just the right amount of each product to satisfy society's wants | 15 | |
| 13885257946 | capitalism | an economic system where supply and demand determine prices | 16 | |
| 13885257947 | circular flow diagram | diagram that shows how households and firms are related by the exchange of resources and products | 17 | |
| 13885257948 | command economy | economy in which the central government dictates what will or will not be produced and who gets what | 18 | |
| 13885257949 | the law of demand | law that states that when the price of a product increases, the quantity demanded decreases, ceteris paribus | 19 | |
| 13885257950 | law of supply | law that states that when the price of a product increases, the quantity supplied increases, ceterus paribus | 20 | |
| 13885257951 | mixed economy | a blend of government commands and capitalism | 21 | |
| 13885257952 | consumption expenditures | all the goods and services sold to households | 22 | |
| 13885257953 | disposable personal income (DPI) | the income of households after taxes have been paid | 23 | |
| 13885257954 | government expenditures | goods and services sold to governments | 24 | |
| 13885257955 | gross domestic product (GDP) | dollar value of production within a nation's borders | 25 | |
| 13885257956 | gross national product (GNP) | dollar value of production by a country's citizens | 26 | |
| 13885257957 | intermediate sales | sales to firms that will incorporate the item into their final product | 27 | |
| 13885257958 | investment sales | sales to firms that will incorporate the item into their final product | 28 | |
| 13885257959 | investment expenditures | expenditures by businesses on plants and equipment plus the change in business inventories | 29 | |
| 13885257960 | national income (NI) | the income earned by households and profits earned by firms after subtracting depreciation and indirect business taxes | 30 | |
| 13885257961 | national income and product accounts (NIPA) | a comprehensive group of statistics that measures various aspects of the economy's performance | 31 | |
| 13885257962 | net exports | exports minus imports | 32 | |
| 13885257963 | personal income (PI) | income received by households | 33 | |
| 13885257964 | real GDP | GDP adjusted for the price changes | 34 | |
| 13885257965 | underground economy | all the illegal production of goods and services and legal production that does not pass through markets | 35 | |
| 13885257966 | GDP | C+I+G+X | 36 | |
| 13885257967 | GDP per capita | GDP/population | 37 | |
| 13885257968 | 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 | 38 | |
| 13885257969 | cyclical unemployment | loss of jobs by individuals during a recession and the corresponding slowdown in production | 39 | |
| 13885257970 | fisher's hypothesis | Nominal Interest Rate= Real Interest Rate + Expected Inflation | 40 | |
| 13885257971 | frictional unemployment | state of being out of work because the person is in between jobs | 41 | |
| 13885257972 | GDP deflator | measure of the level of prices in the economy | 42 | |
| 13885257973 | 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 | 43 | |
| 13885257974 | inflation | a sustained rise in most prices in the economy | 44 | |
| 13885257975 | menu cost | the misallocation of resources because of inflation | 45 | |
| 13885257976 | nonaccelerating inflation rate of unemployment | the full employment rate of unemployment; when employment falls below this rate, inflation accelerates | 46 | |
| 13885257977 | seasonal unemployment | state of being out of work because of the time of year | 47 | |
| 13885257978 | structural unemployment | state of being out of work because the economy is structured, or set up, to a person's disadvantage | 48 | |
| 13885257979 | unemployment rate | the number of unemployed persons divided by the labor force | 49 | |
| 13885257980 | CPI | (Total Cost this Period/Total Cost Base Period) x 100 | 50 | |
| 13885257981 | Inflation rate | [(this period CPI-previous period CPI)/previous period CPI] x 100 | 51 | |
| 13885257982 | GDP deflator | (GDP/Real GPD) x 100 | 52 | |
| 13885257983 | Real GDP | (GDP/GDP deflator) x 100 | 53 | |
| 13885257984 | Nominal Interest Rate | Real Interest Rate + Expected Inflation | 54 | |
| 13885257985 | Unemployment Rate | Number of unemployed/civilian labor force | 55 | |
| 13885257986 | aggregate demand | the demand for all goods and services by all households, business, governments, and foreigners | 56 | |
| 13885257987 | aggregate supply | the supply of all goods and services by all producers in the economy | 57 | |
| 13885257988 | break-even point | point where the consumption function crosses the 45 degree line and income equals spending so that saving is zero | 58 | |
| 13885257989 | business cycle | a wave of economic activity comprised of an expansion and a recession | 59 | |
| 13885257990 | classical economic theory | the predominant paradigm in economic analysis from about 1800 until 1930, based on Say's Law | 60 | |
| 13885257991 | consumption theory | the relationship between consumer spending and income | 61 | |
| 13885257992 | equilibrium price level | the price level that equates aggregate supply and aggregate demand, the average level of prices in the economy | 62 | |
| 13885257993 | 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 | 63 | |
| 13885257994 | expansion | a sustained improvement in economic activity | 64 | |
| 13885257995 | Keynesian theory | theory that opposes Classical theory by emphasizing the short run and focusing on economies that are operating below full capacity | 65 | |
| 13885257996 | marginal propensity to consume (MPC) | idea that given an extra dollar, how much is spent? | 66 | |
| 13885257997 | multiplier | an initial change in spending in the economy that will have a magnified, or multiplied, effect on income | 67 | |
| 13885257998 | recession | a sustained decline in economic activity | 68 | |
| 13885257999 | Say's Law | theory that supply creates its own demand | 69 | |
| 13885258000 | MPC | change in spending / change in income | 70 | |
| 13885258001 | Multiplier | 1/(1-MPC) | 71 | |
| 13885258002 | total change in income | Initial Change in Spending x Multiplier | 72 | |
| 13885258003 | automatic stabilizers | government policies already in place that promote deficit spending during recessions and surplus budgets during expansions | 73 | |
| 13885258004 | crowding out | the increase in interest rates and subsequent decline in spending that occurs when the government borrows money to finance a deficit | 74 | |
| 13885258005 | deficit | situation that exists when government spending exceeds tax revenues | 75 | |
| 13885258006 | fiscal policy | changes in government spending and taxes to fight recessions or inflations | 76 | |
| 13885258007 | inflationary gap | what occurs when the equilibrium quantity of output is above potential output | 77 | |
| 13885258008 | Phillips tradeoff | the inverse relationship between inflation and unemployment | 78 | |
| 13885258009 | rational expectations | the idea that households and businesses will use all the information available to them when making economic decision | 79 | |
| 13885258010 | recessionary gap | what occurs when the equilibrium quantity of output is below potential output | 80 | |
| 13885258011 | stagflation | term used to describe the situation when the economy experiences inflation and a recession simultaneously | 81 | |
| 13885258012 | surplus | spending by the government that is less than tax revenues | 82 | |
| 13885258013 | change in real GDP | Initial Change in Spending x Multiplier | 83 | |
| 13885258014 | 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 | 84 | |
| 13885258015 | currency | coins and paper money | 85 | |
| 13885258016 | discount rate | the rate of interest the FED charges when it makes loans to depository institutions | 86 | |
| 13885258017 | 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 | 87 | |
| 13885258018 | federal reserves | the central bank of the United The United States | 88 | |
| 13885258019 | fiat money | money that is not backed by any precious commodity | 89 | |
| 13885258020 | government securities | IOUs that the government issues when it borrows money | 90 | |
| 13885258021 | liquidity | the ability to turn an asset into cash rapidly and without loss | 91 | |
| 13885258022 | M1 | currency, transaction accounts, and travelers' checks | 92 | |
| 13885258023 | M2 | M1 plus savings accounts, certificates of deposit, and other liquid assets | 93 | |
| 13885258024 | money | anything that society generally accepts in payment for a good or service | 94 | |
| 13885258025 | money multiplier | 1/reserve requirement, the multiple by which the money supply will change because of a change in bank reserves | 95 | |
| 13885258026 | open market operations | activities in which the FED buys and sells government securities in the secondary market | 96 | |
| 13885258027 | required reserves | the amount of any deposit that must be held aside and not used to make loans or buy investment | 97 | |
| 13885258028 | reserve requirement | the percentage of any deposit that must be held aside and not used to amke loans or buy investments | 98 | |
| 13885258029 | savings account | an account at a depository institution that earns interest while the funds are readily available but cannot be withdrawn with checks | 99 | |
| 13885258030 | secondary market | place where government securities that have already been issued may be bought or sold | 100 | |
| 13885258031 | transaction account | a checking account at a bank or a similar account at some other depository institution | 101 | |
| 13885258032 | money multiplier | 1/ Reserve Requirement | 102 | |
| 13885258033 | change in money supply | Money Multiplier x Change in Bank Reserves | 103 | |
| 13885258034 | board of governors | executive board of the FED that makes major monetary policy decisions | 104 | |
| 13885258035 | demand management policy | monetary and fiscal policy | 105 | |
| 13885258036 | equation of exchange | M x V = P x Q; the money supply times its velocity equals the price level times output | 106 | |
| 13885258037 | federal open market committee (FOMC) | a committee within the FED that designs and executes the particular of monetary policy | 107 | |
| 13885258038 | monetarist | one who believes that changes in the money supply have a profound effect on the economy | 108 | |
| 13885258039 | 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 | 109 | |
| 13885258040 | monetary policy | changes in the money supply to fight recessions or inflations | 110 | |
| 13885258041 | money demand | the amount that households and firms want to hold in currency and deposits | 111 | |
| 13885258042 | velocity of money | describing the number of times the typical dollar of M1 or M2 is used to make purchases during a year | 112 | |
| 13885258043 | equation of exchange | M x V = P x Q | 113 | |
| 13885258044 | capital productivity | the amount of output per unit of plant and equipment | 114 | |
| 13885258045 | economic growth | growth of output usually measured by the percentage change in real GDP or real GDP per capita | 115 | |
| 13885258046 | human capital | the skill and knowledge embodied in the labor force | 116 | |
| 13885258047 | labor productivity | the amount of output per unit of labor | 117 | |
| 13885258048 | potential GDP | the amount that can be produced using resources fully and efficiently | 118 | |
| 13885258049 | productivity | output per unit of input | 119 | |
| 13885258050 | total productivity | the amount of all inputs | 120 | |
| 13885258051 | Rule of 70 | years it takes a variable to double =70/the annual growth rate of the variable | 121 | |
| 13885258052 | appreciation | the increase of the value of a currency in terms of another currency | 122 | |
| 13885258053 | 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 | 123 | |
| 13885258054 | balance of trade | a nation's exports minus its imports | 124 | |
| 13885258055 | 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 | 125 | |
| 13885258056 | closed economy | a hypothetical economy with no foreign trade | 126 | |
| 13885258057 | current account | a portion of the balance of payments comprised of the trade balance, net investment income, and net transfers | 127 | |
| 13885258058 | depreciation | the decrease of the value of a currency in terms of another currency | 128 | |
| 13885258059 | dumping | the practice or foreign producers selling a product in the domestic market for less than it cost to produce it | 129 | |
| 13885258060 | exchange rate | the value of one country's currency in terms of another's | 130 | |
| 13885258061 | gold standard | a unit of one currency that is equivalent to a stated amount of gold | 131 | |
| 13885258062 | import quota | a limit on the amount of a product that can be imported | 132 | |
| 13885258063 | import tariff | a tax on a specified import product | 133 | |
| 13885258064 | infant industries | those industries that are just getting started, perhaps requiring trade restrictions | 134 | |
| 13885258065 | 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 | 135 | |
| 13885258066 | managed float | an exchange rate regime where supply and demand determine exchange rates with occasional intervention when warranted | 136 | |
| 13885258067 | net investment income | amount US citizens earned as interest and dividends from abroad minus how much was paid to foreigners in interest and dividends | 137 | |
| 13885258068 | 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 | 138 | |
| 13885258069 | official reserves | government's holdings of foreign currencies | 139 | |
| 13885258070 | open economy | an economy with foreign trade | 140 | |
| 13885258071 | trade deficit | excess of a nation's imports over its exports | 141 | |
| 13885258072 | trade surplus | excess of a nation's exports of over its imports | 142 | |
| 13885258073 | balance of payments | current account +capital account | 143 |
