Civics and Economics: Unit 6
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85 terms
Terms | Definitions |
|---|---|
 Goods | tangible products that we use to satisfy our wants and needs |
| Services | work performed by a person for someone else |
| Factors of Production | resources necessary to produce goods and services |
| Land/Natural Resources | gifts of nature that make production possible |
| Labor | human effort directed toward producing goods and services |
| Capital | previously manufactured goods used to make other goods and services |
| Entrepreneur | individuals who start new businesses, introduce new products, and improve management techniques |
| Gross Domestic Product (GDP) | total dollar value of all final goods and services produced in a country during a single year |
| Standard of living | the material well-being of an individual, group, or nation measured by how well their necessities and luxuries are satisfied |
| Economics | the study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants |
| Needs | requirements for survival, such as food, clothing, and shelter |
| Wants | things we would like to have, such as entertainment, vacations, and items that make life comfortable and enjoyable |
| Scarcity | not having enough resources to produce all of the things we would like to have |
| Trade-off | the alternative you face if you decide to do one thing rather than another |
| Opportunity cost | the cost of the next best alternative use of time and money when choosing to do one thing rather than another |
| Productivity | the degree to which resources are being used efficiently to produce goods and services |
| Specialization | when people, businesses, regions, and/or nations concentrate on goods and services that they can produce better than anyone else |
| Division of labor | the breaking down of a job into separate, smaller tasks to be performed individually |
| Economic interdependence | a reliance on others, as they rely on you, to provide goods and services to be consumed |
| Market economy | system in which individuals own the factors of production and make economic decisions through free interaction |
| Command economy | an economic system in which the major economic decisions are made by the central government |
| Socialism | economic system in which government owns some factors of production and distributes the products and wages |
| Communism | economic system in which the central government directs all major economic decisions. |
| Mixed economy | system combining characteristics of more than one type of economy |
| Capitalism | a system in which private citizens own most, if not all, of the means of production and decide how to use them within legislated limits |
| Free enterprise | economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference. |
| Consumer sovereignty | the role of consumer as the ruler of the market, determining what products will be produced |
| Profit motive | the driving force that encourages individuals and organizations to improve their material well-being |
| Voluntary exchange | the act of buyers and sellers freely and willingly engaging in market transactions |
| Factor market | a market where productive resources are bought and sold |
| Product market | a market where producers offer goods and services for sale |
| Demand | the desire, willingness, and ability to buy a good or service |
| Law of demand | the concept that people are normally willing to buy less of a product if the price is high and more of it if the price is low |
| Diminishing marginal utility | decreasing satisfaction or usefulness as additional units of a product are acquired |
| Substitute goods/substitute | a competing product that consumers can use in place of another |
| Complementary goods | product often used with another product (used together) |
| Demand elasticity | measure of responsiveness relating change in quantity demanded to a change in price |
| Supply | the amount of goods and services that producers are able and willing to sell at various prices during a specified time period |
| Law of supply | the principle that suppliers will normally offer more for sale at higher prices and less at lower prices |
| Supply elasticity | responsiveness of quantity supplied to a change in price |
| Surplus | situation in which quantity supplied is greater than quantity demanded; situation in which government spends less than it collects in revenues |
| Shortage | situation in which quantity demanded is greater than quantity supplied |
| Equilibrium/ Market price | the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy |
| Sole proprietorship | a business owned and operated by a single person |
| Partnership | a business owned by two or more people |
| Corporation | type of business organization owned by many people but treated by law as though it were a person |
| Stock | ownership share of a corporation |
| Cooperative | a voluntary association of people formed to carry on some kind of economic activity that will benefit its members |
| Labor unions | association of workers organized to improve wages and working conditions |
| Collective bargaining | process by which unions and employers negotiate the conditions of employment |
| Strike | when workers deliberately stop working in order to force an employer to give in to their demand |
| Lockout | situation that occurs when management prevents workers from returning to work until they agree to a new contract |
| Incentive | reward offered to try to persuade people to take certain economic actions |
| Disposable income | money income left after all taxes on it have been paid |
| Interest | the payment people receive when they lend money or allow someone else to use their money |
| Commercial bank | a financial institution that offers full banking services to individuals and businesses |
| Credit Union | nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services |
| Federal Deposit Insurance Corporation (FDIC) | federal agency that insures individual accounts in financial institutions for up to $100,000 |
| private goods | goods that, when consumed by one individual, cannot be consumed by another |
| public goods | economic goods that are consumed collectively, such as highways and national defense |
| externality | the unintended side effect of an action that affects someone not involved in the action |
| natural monopoly | a market situation in which the costs of production are minimized by having a single firm produce the product |
| business cycle | alternating periods of growth and decline that the economy goes through |
| expansion | part of the business cycle in which economic activity increases |
| peak | period of prosperity in a business cycle in which economic activity is at its highest point |
| recession | part of the business cycle in which the nations output does not grow for at least six months |
| unemployment rate | the percentage of people in the civilian labor force who are not working but are looking for jobs |
| fiscal policy | the federal governments use of spending and taxation policies to affect overall business activity |
| inflation | sustained increase in the general level of prices |
| consumer price index | measure of the change in price over time of a specific group of goods and services |
| comparative advantage | the ability of a country to produce a good at a lower opportunity cost than another country can |
| European union | organization of European nations whose goal is to encourage economic integration into a single market in Europe. |
| north american free trade agreement (NAFTA) | trade agreement designed to reduce tariff barriers between Mexico, Canada, and the United States |
| world trade organization(WTO) | an international body that oversees trade among nations |
| exchange rate | the price of one nations currency in terms of another nations currency |
| balance of trade | the difference between the value of a nations exports and its imports |
| globalization | individuals and nations working across barriers of distance, culture, and technology. |
| multinational | firm that does business or has offices in many countries |
| federal reserve system | The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates a certain percentage of deposits that banks have to set aside as cash in their own vaults or as deposits in their federal reserve district bank |
| Monetary policy | policy that involves changing the rate of growth of the money supply in circulation in order to affect the cost and availability of credit |
| Discount rate | the interest rate the Fed charges on its loans |
| Reserve requirement | fed may raise or lower the reserve requirement for member banks. member banks must keep a certain percentage of their money in federal reserve banks as a reserve against their deposits. if the fed raises the reserve requirement, banks must leave more money with the fed, and they have less money to lend. when the fed lowers the reserve requirement, member banks have ore money to lend. |
| Open market operations | purchase or sale of US government bonds and treasury bills |
| Deficit | situation in which government spends more than it collects in revenues |
| Bond | contract to repay borrowed money with interest at a specific time in the future. |
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