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Economics semester exam study guide

Terms in this set (32)

Investing
Using savings in a way that earns income to create a return
Mutual fund
Financial organization that accepts funds from many people and invests them in a variety of stocks
Saving
The act of choosing not to spend current income
Return
Income earned from funds that are invested
Property insurance
Protects policy holders against the losses to their property
Policy
The legal contract between an insured person and an insurance company
Personal insurance
Protection against financial loss if an insured person is injured, becomes ill, or dies unexpectedly
Liability insurance
Protection against losses you cause by injuring other people or damaging another person's property
Insurance
Protection purchased against losses beyond your ability to withstand
New York stock exchange
Formal exchange where shares of stock are bought and sold
Diversification
Investing in a wide variety of firms
Deductible
Amount an insured person must pay before an insurance company pays any part of a loss
Preferred stock
Does not give owners a vote in how the corporation is operated, but does give a fixed dividend
Corporate stock
Shares of ownership in a corporation
Common stock
Gives owners one vote per share when important decision are made for the firm
Corporate bond
Loan that entitles an investor to be repaid at the specified date and receive interest until that date
Corporation
Legal entity with an existence that is distinct from the people who organize, own, and run it
Sole proprietorship
Simplest form of business organization; a firm owned and run by one person
Publicly traded corporation
Owned by many shareholders; shares can be bought and sold
Private corporation
Ownership is limited to just a few people, sometimes only family members; shares are not publicly traded
Partnership
Two or more people agree to contribute resources to a business in return for shade of the profits
Not-for-profit organization
Group that does not pursue profit as a goal and often engages in activities with a social purpose
Liability
Legal obligation to pay any debts of a business
Innovation
Process of turning an invention into a marketable product
Financial capital
Money needed to start or expand a business
Cooperative
An organization consisting of people who pool their resources to buy or sell more efficiently than they could independently
Entrepreneur
Comes up with an idea, turns that idea into a marketable product, accepts the risk of success or failure, and claims any resulting profit or loss
Surplus
Amount of a product that remains unsold at a given price
Shortage
Amount by which the quantity demanded exceeds the quantity supplied at a particular price
Productive efficiency
Situation achieved when a firm produces output at the lowest possible cost per unit
Neuroeconomics
Examines how economics decision making affects areas of the brain
Market equilibrium
Quantity demanded equals quantity supplied and the market clears
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