| Term | Definition |
|---|
| scarcity | key economic problem, not enough to satisfy wants |
| choice | must happen because of scarcity |
| opportunity cost | highest valued alternative to the item chosen |
| TINSTAAFL | no free lunch, every action has a cost |
| needs | things for survival |
| wants | would like to have |
| businesses | organizations that bring together resources to make/sell things |
| consumers | buyers of goods and services |
| work | activities to produce goods and services |
| jobs | specific activities to earn income |
| save | decision not to spend money so available later |
| barter | exchange of goods and services without using money |
| incentives | influence whether people want to do things |
| natural resources | land, water, trees |
| capital resources | equipment, factories, tools, not money |
| human resources | works, entrepreneurs |
| market | contact between buyers and sellers of an item |
| demand | how much consumers are willing and able to buy at a series of prices, desires of buyers in the market |
| supply | how much sellers are willing to put on the market for sale at a series of prices |
| price | dollars paid for good or service, relative value |
| resource allocation | determined by profits/prices, prices of resources as determined in the markets by which the resources are allocated |
| producers | people who produce goods and services |
| competition | buyers competing to buy a good at lowest price, sellers competing to sell at highest price |
| income | payments received by sellers of resources over a period of time, (spend, tax, save) |
| growth | increase of output of a society, improvements in technology |
| free enterprise economy | limited government role |
| mixed economy | most decisions made by individuals, active government involvement |
| entrepreneurship | when a person takes a risk to earn a profit |
| business risk | uncertainty associated with decisions made by a business |
| productivity | how much output comes from a unit of a resource, influenced by technology |
| economic institutions | laws that define property rights, banking systems, trade laws that play a role in growth and productivity |
| market economy | same as free enterprise, emphasize role of markets (advertising) |
| role of government | laws set in regulating economic activities and improving economic conditions |
| taxes | provide funding for government spending |
| government regulations | prevent the actions of one part from causing harm to another, minimum wage law, safer work facilities |
| economic activities | decide levels of spending |
| national economy | macroeconomics, "big picture" affects entire population |
| microeconomics | individuals, people (supply/demand) |
| fiscal policies | changes in government spending, taxing (Pres, Congress rebate checks) |
| monetary policies | changes in money supply, Federal Reserve |
| unemployment | looking for a job |
| inflation | rise in the overall level of prices of goods and services in the economy |
| money | M1, chekcing accounts, cash, coins, travelers checks, debit cards (not credit cards or savings acct.) |
| commercial banks | profit from using money by interest spread, loan at higher rate |
| Federal Reserve Bank | control money supply |
| trade (specialization) | countries specialize in producing goods/services for "comparative advantage" |
| exports | sells to other countries |
| imports | buys from other countries |
| economic development | countires grying to improve their ability to produce more goods and services in a way that benefits them; long-term |
| interdependence | international trade, rely on other countries from some goods/serives |
| goods | tangible items |
| services | intangible items |
| government-provided goods and services | things governments make available to society |
| investment | businesses acquiring new factories, buying stocks/bonds |
| opportunity costs (tradeoffs) | the highest valued alternative to an action chosen |
| resources | factors of production (labor, land, capital) |
| liquidity | the ease with which an asset is converted to money |
| circular flow model | view of relationships that exist among sectors and markets |
| real flow | movement of goods, services, or resources |
| money flow | movement of money |
| household sector | individuals/families that provide resources and buy goods |
| business sector | firms that buy resources and produce goods |
| transfer payments | made by government in household sector (welfare, unemployment) |
| subsidies | forms of assistance provided by government to businesses |
| foreign sector | other countries not included in "closed economy" model |
| revenue | money coming in |
| economics | making wise decisions in face of scarcity |
| economic way of thinking | comparing marginal benefits to marginal costs |
| wants | things people are willing to pay for |
| human capital | education, skills, training |
| scarcity | want more goods and services than can be produced |
| productive efficiency | producing a given output level with fewest resources |
| allocative efficiency | producing what people want with scarce resources |
| choice | deciding what to slect in the face of scarcity |
| marginal benefit | additional benefit of having one more unit of something |
| marginal cost | additional cost from haing one more unit of something |
| economic decision making | goals, constraints, alternatives |
| tradition economic system | what family did |
| command economic system | government driven |
| market (price) economic system | supply/demand, free enterprise |
| payments to resources | wages (labor), rent (land), interest (capital), profit (entrepreneurs) |
| frictional unemployment | voluntarily leaving work place |
| structural unemployment | laid off because of technology or demand of good |
| cyclical unemployment | recession in economy |
| inflation | rise in prices in economy |
| inflation rate | change in price level from one year to next |
| commodity money | has intrinsic value in gold, silver |
| fiat money | does not have intrinsic value (cost of paper, printing) |
| functions of money | medium of exchange, standard of value, store of value |
| interest | price of money |
| open market operations (OMO) | Fed buying and selling gov bonds |
| federal funds rate | interest rate charged by one commercial bank to another on overnight loan |
| reserve requirement | percentage of customers' deposits bank must hold |
| discount rate | interest rate charged by Fed on loans to commercial banks |
| national debt | "public debt" sum of annual budget deficit |
Combine with other sets
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