| Term | Definition |
|---|
| ability-to-pay tax | govt should tax ppl according to their ability to pay the tax |
| absolute advantage | the ability to produce a good a lower cost than another |
| total demand | quantities of a particular good/service that consumers are willing and able to buy |
| total supply | quantities of a particular good/service that produces are willing and able to sell |
| arbitration | when party makes a decision |
| asset | anything of monetary value owned by a company |
| barter | exchange of good or service w/o using money |
| bear market | when the market is at an all time low |
| benefits-received tax | govt should tax ppl in proportion to the benefits they receive from a govt good/service |
| business cycle | measure of recurring ups and downs in the level of economic activity |
| bull market | when the stock market is at an all time high |
| capital resources | buildings, tools and machinery that ppl create to use and produce goods |
| charter | document that states the nature of the business, owners of the stock and the types of stock to be sold |
| closed shop | had to belong in the union to be hired |
| open shop | doesn't require a worker to be in the union to be hired |
| union shop | allowed to be hired on the condition that they join the union later on |
| collective bargaining | union and company rep meet to discuss new labor contract |
| command economy | where govt holds most of the property rights |
| comparative advantage | ability to produce a product at a lower opportunity cost than another |
| complementary goods | products that are often used together |
| conciliation | settling things; pacify |
| consumer price index | measures price of market basket of 300 goods that consumers typically purchase |
| cost-push inflation | prices rise from increases in cost of production |
| deficit | when u spend more than you make |
| demand-pull inflation | rising prices in which there is too much money chasing too little goods |
| differentiation | uniqueness in a product |
| diminish marginal utility | point when additional unit of a product consumed is less satisfying than the one before. too much donuts. |
| discount rate | interest charged by the federal reserve on its loans to banks and other financial institutions |
| dividends | profits distributed to stockholders |
| division of labor | assembly line; labor forces gets divided into a specific assembly line where they specialize in one thing |
| economies of scale | decrease in cost of product as a result to large scale production |
| entrepreneurship | imagination, innovative thinking, and management skills needed to start and operate a business |
| exchange rate | value of one nation's currency stated in terms of the value of another nation's currency |
| excise tax | tax on imports |
| export subsidy | payment by a country to its exporters enabling them to sell their products at a lower price than at home |
| externality | economic side effect of producing/consuming a good/service that generates benefits to someone other than the person who decides; pollution |
| factors of production | land, labor, and capital resources used to produce goods and services |
| Federal Reserve System | the nation's central bank |
| fiscal policy | use of govt spending and taxation to stabilize the economy |
| flat tax | fixed tax on goods |
| franchise | license that entitles its holder to operate individually owned business as if it were part of a large chain of stores; McDonalds is a franchise |
| Free Trade Association | an agreement among countries to remove barriers to trade among themselves |
| globalization | process of countries and their citizens becoming increasingly interdependent |
| gross domestic product | final value of all goods and services produced within a country in a year |
| inflation | a general rise in overall products |
| infrastructure | buildings, roads, and power supplies |
| interest | income earned from allowing someone else to use ur financial capital |
| labor | physical and mental efforts people use to create goods/services |
| law of demand | inverse relationship between quantity demanded and price of product |
| law of diminishing returns | more and more variables are added to a fixed amount of resources, the additional amount produced eventually decreases |
| law of supply | positive relationship b/t the quantity supplied and the price of the product |
| limited liability | amount of monetary value owed by an individual or company is limited |
| macroeconomics | the study of the economy as a whole |
| marginal benefit | additional gains or benefits |
| market-clearing price | price at which the amount supplied is equal to the amount demanded |
| market economy | an economy that undergoes changes and adjustments |
| merger | one business buys another business; buyout |
| microeconomics | study of individual consumers and businesses |
| mixed economy | economic system that blends voluntary exchange, government command, and traditional elements of economic choice-making |
| monetary policy | regulating money supply to help the economy achieve full employment |
| monopolistic competition | market structure with many firms that offer similar but not identical products |
| open market operations | sell govt securities |
| oligopoly | few big sellers supply products |
| monopsony | one big buyer |
| pure monopoly | a single large business |
| opportunity cost | highest valued alternative given up given up as a result of making a choice |
| price effect | buy less of something at higher prices than they would at lower prices |
| price elasticity of demand | a measure of the impact of the price effect; milk vs soda |
| price elasticity of supply | ford vs muffin. supply is easier to accommodate for muffins rather than cars. |
| progressive tax | tax on rich; takes money from income of high income earners |
| proportional tax | same on all levels |
| perfect competition | when all a large number of firms all produce the same product at the same price |
| quota | restriction on the number of goods entering the country from abroad |
| read gdp | gross domestic product adjusted for inflation |
| recession | a period of time 6 months or longer where total gdp output declines |
| regressive tax | tax on poor; tax decrease as income decrease |
| scarcity | resources are not available to satisfy wants of ppl |
| sole proprietorship | business owned by one person |
| stock exchange | market in which the public buys and sells shares of stock |
| shortage | difference b/t amt supplied and amt demanded; when asking price is less than market-clearing price |
| tariff | tax on imports |
| traditional economy | economy where ppl rely on traditions and customs to make choices |
| union shop | get job; but have to join the union later |
Combine with other sets
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