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26 terms

Unit 4 Vocab

STUDY
PLAY
Economic system
A nation's plan for answering the key economic questions
Custom-based economy
An economy in which goods are produced the way they always have been produced
Directed or planned economy
An economy in which the resources are owned and controlled by the government
Market economy
An economy in which individuals are free to engage in business transactions with buyers who are willing and able to buy and sellers who supply goods and services from which they profit
Marketplace
Any place where buyers and sellers exchange goods and services for some form of money
Capitalism (free or private enterprise system)
An economic system in which most economic resources are privately owned and decisions are largely made by free exchange in the marketplace
Free-private enterprise system
An economic system in which most economic resources are privately owned and decisions are largely made by free exchange in the marketplace
Private property
The right to own, use or dispose of things of value
Profit
Money left from sales after subtracting the cost of operating the business
Profit motive
The desire to work hard and be creative to earn a higher profit
Competition
The rivalry among businesses to sell their goods and services to buyers
Labor/worker productivity
The quantity of a good an average worker produces in one hour
Standard of living
A measure of how well people in a country live; the quality and quantity of wants and needs that are satisfied
Public goods
Things that are needed and provided by a community and are equally accessible to everyone
Gross domestic product (GDP)
The total value of all final goods and services produced in a country in one year
Base year
The year chosen to compare an item, such as price, to the same item in another year
GDP per capita
The GDP divided by the total population of a country
Business cycle
The movement of an economy form one condition to another and back again
Prosperity
A phase of the business cycle when most people who want to work are working and businesses produce goods and services in record numbers
Recession
A period where demand begins to decrease, businesses lower production of goods and services, unemployment begins to rise, and GDP growth slows for several quarters
Depression
A phase marked by high unemployment, weak sales of goods and services, and business failures
Recovery
A phase of the business cycle in which unemployment begins to decrease, demand for goods and services increases and GDP begin to rise again
Inflation
An increase in the general price level
Deflation
A decrease in the general price level
Law of Diminishing Returns
The tendency for a continuing application of effort or skill toward a particular project or goal to decline in effectiveness after a certain level of result has been achieved
Economies of Scale
Reduced cost of production per unit as the number of units produced increases