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the way a nation makes economic choices


all things used in producing goods and services

factors of production



everything on the earth that is in its natural state


all the people who work in the economy


money needed to start and operate a business


the skills of people who are willing to risk their time and money to run a business


the physical development of a country


the difference between wants and needs and available resources

market economy

there is no government involvement in economic decisions

command economy

the government controls the factors of producton and makes all the decisions about their use


an economic system characterized by private ownership of business


increased government involvement in people's lives and the economy


the government runs everything, totalitarian


the process of selling government-owned businesses to private individuals


output per worker hour that is measured over a defined period of time, such as week, month, or year

Gross Domestic Product (GDP)

measure of the goods and services produced using labor and property located in this country


rising prices

Consumer Price Index (CPI)

measures the change in price over a time of some 400 specific retail goods and services used by the average urban household

Producer Price Index (PPI)

measures wholesale price levels in the economy

business cycle

recurring changes in the economy


expansion, the time when the economy is flourishing


period of economic slowdown that lasts for two quarters, or six months


prolonged depression; it becomes nearly impossible to find a job and many business are forced to shut down


increase in the overall economic activity

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