Terms in this set (35)
the way in which human resources and natural resources are used to produce goods and
services; the study of how people, businesses, and governments choose to use their limited (scarce) resources
an economic system in which individuals, not the government, control the production and distribution of goods and services; also called a market system
economic system in which individuals and businesses are allowed to compete for profit with aminimum of government interference
supply and demand
a theory explaining the interaction between the supply of a resource and the demand for that
resource. Generally, if there is a low supply and a high demand, the price will be high. In contrast, the greater the
supply and the lower the demand, the lower the price will be.
a situation in which producers or sellers of similar goods or service each try to get consumers to buy
their products or use their services
a good that is sent from one country to another; (verb) to send goods from one country to another
a good that is brought into one country from another; (verb) to bring goods into one country from another
gross domestic product (GDP)
the total dollar value of the final goods and services produced in a country each
year (compare to GNP, GNI)
per capita GDP
An approximate value of goods produced per person in the country, equal to the country's GDP divided by the total number of people in the country. Sometimes used as an indicator of standard of living, with higher per capita GDP being interpreted as having a higher standard of living.
someone who buys and uses goods and services
money that a government collects from people and businesses; a fee charged by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. The purpose of taxation is to pay for government expenses (e.g. roads, schools, social services).
the money a person gets from salary or wages, profits, interest, investments, and other sources
a tax on a person's income
income after all expenses have been met or deducted
income before taxes or deductions
money owed when you or a government buy something on credit or borrow money
money brought in by a business or government
The promise of future payment in exchange for money, goods, services, or anything else of value. Car
loans, mortgages, credit cards, and corporate bonds are forms of credit.
the money a person pays to borrow money, or the money a bank pays depositors for using their money
to obtain or receive (something, such as money) on loan for temporary use, intending to give it, or
something equivalent or identical, back to the lender.
money that is put away to be used later
The rate at which the general level of prices for goods and services is rising, and, subsequently,
purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt
to keep the excessive growth of prices to a minimum. As inflation rises, every dollar will buy a smaller percentage of a
good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year. Most countries' central
banks will try to sustain an inflation rate of 2-3%.
In economics, a depression is a sustained, long-term downturn in economic activity in one or more
economies. It is a more severe downturn than a recession. A depression is characterized by economic factors such as
substantial increases in unemployment, a drop in available credit, diminishing output, bankruptcies and debt defaults,
reduced trade and commerce, and instability in currency values. In times of depression, consumer confidence and
investments decrease, causing the economy to shut down.
a period of temporary economic decline during which trade and industrial activity are reduced,
generally identified by a fall in GDP in two successive quarters.
a fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual
sum, made by an employer to an employee
a legal agreement in which a person borrows money to buy property (such as a house) and pays back
the money over a period of years
an initial payment made when something is bought on credit
the management of money and financial decisions for a person or family including budgeting,
investments, retirement planning and investments
plan used to decide the amount of money that can be spent and how it will be spent
a sum of money placed or kept in a bank account, usually to gain interest
the act of taking money out of a bank account
cost of living
The amount of money needed to sustain a certain level of living, including basic expenses such as
housing, food, taxes, and healthcare. Cost of living is often used when comparing how expensive it is to live in one city
The market in which shares of publicly held companies are issued and traded either through
exchanges or over-the- counter markets. Also known as the equity market, the stock market is one of the most vital
components of a free-market economy, as it provides companies with access to capital in exchange for giving
investors a slice of ownership in the company. The stock market makes it possible to grow small initial sums of money
into large ones, and to become wealthy without taking the risk of starting a business or making the sacrifices that
often accompany a high-paying career.
A collection of stocks and/or bonds. You can think of a mutual fund as a company that brings
together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares,
which represent a portion of the holdings of the fund.
putting money into an asset with the expectation of capital appreciation, dividends, and/or interest