32 terms

Unit 1 Economy Terms

Market Economy
Buyers and sellers answer the three economic questions of what, how, and for whom to produce.
Traditional Economy
System in which economic decisions are based on customs and beliefs.
A type of trade barrier that forbids trade with another country.
Currency Exchange
A method by which money from one country is converted into the currency of another country to pay for goods and services in that country.
Human Capital
The people who perform labor and the education and training needed to make them more productive.
Natural Resources
Materials or substances that occur in nature and can be used for economic gain.
A type of trade barrier that places a limit on the amount of a good that can be imported into a country.
Standard of living
A level of material comfort as measured by the goods, services, and luxuries available to an individual, group, or nation.
Mixed Economy
When the economy shows characteristics of both command and market.
Command Economy
The government makes all of the economic decisions and answers the economic questions of what, how, and for whom to produce.
When one country can produce a good or service at a lower opportunity cost than another country.
Literacy Rate
The number of people in an area that can read and write.
When individuals or groups have an idea for a good or service and take the risk to produce it.
Physical Capital
The factories, machinery, and technology used to produce goods and services.
A type of trade barrier that places a tax on imported goods.
Economic Continuum
An instrument for showing how economic systems relate to each other on a scale of more government control vs. less government control.
To use or use up something
The exchange of goods or services for other goods or services without using money
The action of buying and selling goods and services.
Extreme scarcity of food
The basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed for the operation of a society (country, city, etc.) or enterprise.
Merchandize; articles that can be traded
Supply aids or services rather than products or goods
To put money into something on hopes of earning a profit in return
Having only enough to survive; having no extra left over
Diversified economy
Does not depend on one type of good or service; produces multiple types of goods and services
The process of distributing something
insufficient for the demand (especially of food, money, or some other resource)
The action or process of making or manufacturing from components or raw materials
A penalty for disobeying a law or a rule
Gross Domestic Product (GDP)
The total value of all goods and services produced within a country in a year
Per Capita GDP
Gross Domestic Product (GDP) divided by the number of people in the country