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Vocabulary words from Prentice Hall Economics: Principles in Action textbook.
Terms in this set (100)
a sustained drop in the price level.
a graphic representation of a demand schedule.
the money in checking accounts.
theory that inflation occurs when demand for goods and services exceeds existing supplies.
a table that lists the quantity of a good a person will buy at each different price.
theory that inflation occurs when demand for gods and services exceeds existing supplies.
the loss of the value of capital equipment that results from normal wear and tear, or, a decrease in the value of a currency.
a recession that is especially long and severe.
the removal of some government controls over a market.
country with a higher average level of material well-being.
the process by which a nation improves the economic, political, and social well-being of its people.
making a product different from other similar products.
diminishing marginal returns
a level of production in which the marginal product of abor decreases as the number of workers increases.
rate the Federal Reserves charges for loans to commercial banks.
a person who wants a job but has giben up looking.
spending category about which government planners can make choices.
describes any price or quanitity not a equalibrium; when quantity supplied is not equal to quantity demanded in a market.
disposable personal income (DPI)
total after-tax income paid to households, calculated by subtracting income taxes from personal income.
spreading out investments to reduce risk.
the portion of coporate profits paid out to stockholders.
index that shows how certain stocks have traded.
goods that last for a relatively long time, such as refrgerators, cars, and DVD players.
easy money policy
monetary policy that increases the money supply.
steady, long-term increase in real GDP
the study of how people seek to satisfy their needs and wants by making choices.
the method used by a society to produce and distribute goods and services.
economies of scale
factors that cause a producer's average cost per unit to fall as output rises.
using resources in such a way as to maxmize the production of goods and services.
describes demand that is very sensitve to a change in price.
elasticity of demand
a measure of how consumers react to a change in price.
elasticity of supply
a measure of how quantity supplied reacts to a change in price.
area where companies can operate free of certain local, state, and federal taxes and restrictions.
social welfare program that people are "entitled" to if hey meet certain eligibility requirements.
ambitious leader who combines land, labor, and capital to create and market new goods or services.
the point at whcih quantity demanded and quantity supplied are equal.
the wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market.
claims of ownership in a corporation.
a tax on the estate, or total value of the money and property, of a person who has died.
a regional trade organization made up of European nations.
when quantity demanded is more than quantity supplied.
in banking, reserves of cash more than the required amounts.
when quantity supplied is more than quantity demanded.
the value of a foreign nation's currency in terms of the home nation's currency.
a tax on the production or sale of a good.
a period of economic growth as measured by a rise in real GDP.
fiscal policies, like higher spending and tax cuts, that encourage economic growth.
a good that is sent to another country for sale.
an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.
market in which firms purchase the factors of production from households.
the income people recieve for supplying the factors of production: land, labor, or capital.
factors of production
land, labor, and capital; the three groups of resources that are used to make all goods and services.
the practice of negotiating labor contracts that keep unnecessary workers on a company's payroll.
Federal Advisory Council (FAC)
the research arm of the Federal Reserve.
a plan for the federal government's revenues and spending for the coming year.
Federal Deposit Insurance Corporation (FDIC)
the government agency that insures customer deposits if a bank fails.
federal funds rate
interest rate banks charge each other for loans.
Federal Open Market Committee (FOMC)
Federal Reserve committee that makes key decisions about interest rates and the forwth of the United States money supply.
Federal Reserve Districts
the twelve banking districts created by the Federal Reserve Act.
Federal Reserve note
the national currency we use today in the United States.
Federal Reserve System
the nation's central banking system.
money that has value because the government has ordered that it is an acceptable means to pay debts.
taxes that fund Social Security and Medicare.
interest accrued on, and fee charged for, some forms of credit.
claim on the property or income of a borrower.
institution that helps channel funds fom savers to borrowers.
the system that allows the transfer of money between savers and borrowers.
an organization that uses resources to produce a product, which it then sells.
government use of taxing and spending to stabilize the economy.
a twelve-month period that can begin on any date.
a cost that does not change, no matter how much is produced.
fixed exchange-rate system
a currency system in which governments try to keep the values of their currencies constant against one another.
income that does not increase even when prices go up.
flexible exchange-rate system
a currency that allows the exchange rate to b determined by supply and demand.
government-issued coupons that recipients exchange for food.
foreign direct investment
the establishment of an enterprise by a foreigner.
foreign exchange market
the banks and other financial institutions that facilitate the buying and selling of foreign currencies.
investment originating from other countries.
foreign portfolio investment
the entry of funds into a country when foreigners make purchases in the country's stock and bond markets.
fractional reserve banking
a banking system that keeps only a fraction of funds on hand and lends out the remainder.
the right to sell a good or service within an exclusive market.
an economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market.
someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good.
a region where a group of countries has agreed to reduce trade barriers.
unemployment that occurs when people take time to find a job.
payment other than wages or salaries.
the level of employment reached when there is no cyclical unemployment.
contracts to buy or sell at a specific date in the future at a price specified today.
partnership in which partners share equally in both responsibility and liability.
a tax on money or property that one living person gives to another
a policy of "openness" introduced into the Soviet Union in the late 1980s.
an unofficial, invisible barrier that precents women and minorities from advancing in busnesses dominated by white men.
a monetary system in which paper money and coins are equal in value to a certain amount of gold.
physical objects such as clothes or shoes.
a monopoly created by the government.
the collapse of the stock market in 1929.
the severe ecconomic declie that began in 1929 and lasted for more than a decade.
paper currency issued by the North during the Civil War.
gross domestic product (GDP)
the dollar value of all final goods and services produced within a country's borders in a given year.
gross national product (GNP)
the annual income earned by U.S.-owned firms and U.S. residents.
guns or butter
a phrase that refers to the trade-off that nations face when choosing whether to produce more or less military or consumer goods.
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