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Economics - Unit 1 Economics Fundamentals

Terms in this set (83)

Economic efficiency - refers to how well scarce productive resources are allocated to produce the goods and services people want and how well inputs are used in the production process to keep production costs as low as possible.

Economic security This refers to protecting consumers, producers, and resource owners from risks that exist in society. Each society must decide from which uncertainties individuals can and should be protected, and whether individuals, employers, or the government should provide or pay for this protection...(health care for elderly; Social Security, disability; unemployment compensation, etc.)

Economic equity - This means what is "fair". Economic actions and policies have to be evaluated in terms of what people think is right or wrong. Equity issues often arise in questions dealing with the distributions of income and wealth.

Economic stability - This refers to maintaining stable prices and full employment and keeping economic growth reasonably smooth and steady. Price stability means avoiding inflation or deflation. Full employment occurs when an economy's scarce resources, especially labor, are fully utilized.

Economic freedom - refers to such things as the freedom for consumers to decide how to spend or save their incomes, the freedom of workers to change jobs and join unions, and the freedom of individuals to establish new businesses or close old ones.

Economic Growth This refers to increasing the production of goods and services over time. Economic growth is measured by changes in the level of real gross domestic product (GDP). A target annual growth rate of 3 to 4 percent in real GDP is generally considered to be reasonable and sustainable.