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Definition
The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals. |
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The part of economics study that looks at the operation of a nation’s economy as a whole. |
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| The part of economics study that looks at the behavior of people and organizations in particular markets. |
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Term
Adam Smith and the Creation of Wealth |
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Definition
•Freedom was vital to any economy’s survival.
•Freedom to own land or property and the right to keep the profits of a business is essential.
•People will work hard if they believe they will be rewarded. |
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Definition
An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit. |
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Capitalism’s Four Basic Rights
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Definition
1.The right to own private property
2.The right to own a business and keep all that business’s profits
3.The right to freedom of competition
4.The right to freedom of choice |
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Definition
Decisions about what and how much to produce are made by the market. Consumers send signals about what they like and how they like it. |
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The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time. |
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Definition
The quantity of products that people are willing to buy at different prices at a specific time. |
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| Market price (equilibrium point) |
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Definition
| The price determined by supply and demand. |
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An economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people. |
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| Positive and Negative consequences of Socialism |
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Definition
Positives
Social equality
Free education
Free health care
Free child care
Negatives
Brain Drain — The loss of the best and brightest people to other countries.
Fewer inventions and less innovation because the reward is not as great as it would be in capitalistic countries. |
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Definition
An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production. |
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Definition
Economic systems in which some allocation of resources is made by the market and some by the government. |
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Term
| Gross Domestic Product GDP |
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Definition
The total value of final goods and services produced in a country in a given year. |
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Definition
The number of civilians at least 16 years old who are unemployed and have actively tried to find a job within the prior four weeks. |
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Definition
| A general rise in the prices of goods and services over time. |
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Term
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Definition
Monthly statistics that measure the pace of inflation or deflation. (they use a market basket of key products purchased daily (milk, gas, bread) then compare the prices with those from a number of years ago |
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Term
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Definition
The periodic rises and falls that occur in economies over a period of time (months, years, decades)
1.Economic Boom the economy is growing quickly and unemployment is low.
2.Recession — Two or more consecutive quarters of decline in the GDP.
3.Depression — A severe recession, usually accompanied by deflation.
4.Recovery — When the economy stabilizes and starts to grow, eventually leading to an economic boom. |
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Term
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Definition
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending.
•Tools of fiscal policy:
•Taxation
Government spending |
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Definition
The amount of money the federal government spends beyond what it collects in taxes for a given fiscal year. |
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Definition
The sum of government deficits over time. |
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Definition
| When the government takes in more revenue than it spends. (very rare indeed) |
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Term
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Definition
The management of the money supply and interest rates by the Federal Reserve Bank. |
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