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| an economy in which the government makes all economic decisions about how the factors of production are used. |
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| The forces of supply and demand determine how economic questions should be answered. |
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| An economy in which all economic decisions are made by tradition. |
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| land, labor, capital, entrepreneurial ability. (resources) |
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| land, labor, capital, entrepreneurial ability. (factors of production) |
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| When there are not enough resources to satisfy our unlimited needs and wants. |
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| the value of the next best alternative |
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| Production possibilities curve/frontier |
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| A graphic representation of the production relationship between two goods |
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| Capital and consumer goods |
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| Capital goods are those used in production while consumer goods are those that people use in their everyday lives. |
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| Able to produce a good or service efficiently or by using fewer resources. |
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| Able to produce a good or service at a lower opportunity cost than another producer. |
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| how much of a good or service consumers are willing and able to purchase at every price level. |
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| how much of a good or service consumers are willing and able to purchase at one price level. |
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| there is an inverse relationship between price and quantity demanded |
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Definition
| the price of a good affects the amount of a good or service a consumer is willing and able to purchase |
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Definition
Tastes and preferences
Related goods and services
Income
Buyers, quantity of
Expectations of price |
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Definition
| How much of a good producers are able and willing ot supply or produce at every price level. |
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Definition
| how much of a good or service producers are able or willing to produce at a certan price level. |
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Definition
| There is a direct connection between the price and quantit supplied. |
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Definition
Resource:cost and availablility
Opportunities: cost of alternative production
Taxes: government regulation and subsidies
Technology (productivity)
Expectations of the producer
Number of firms in the industry |
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Definition
| The intersection of two economic lines such as supply and demand, where quatity supplied and demanded are equal at a specific price |
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Definition
| When quantity demanded is greater than quantity supplied |
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Definition
| When quantity supplied is greater than quantity demanded |
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Definition
| When government sets a price below equilibrium |
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Definition
| when government sets a price above equilibrium |
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Definition
| shows the connection between markets, government firms, and households in the economy. |
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Definition
| resource market where households sell resources and businesses buy them. |
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Definition
| factor market where households sell resources and businesses buy them |
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Definition
| the banking, stock, and bond markets through which private savings and foreign lending flow to become investment, government, and foreign borrowing |
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| GDP: Gross domestic product |
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Definition
| The total dollar value of all final goods and services produced in one year. |
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| GNP: Gross National Product |
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Definition
| The final value of all goods and services that the nation's citizens produced during one time period. |
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Definition
| Portrays the highs and lows of an economy as people buy and sell goods and services |
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Definition
| a sustained increase in price level over time |
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Definition
| measures the change in prices of goods in a specific market basket that consumers purchase |
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Definition
| this index looks at the change in the average price level of goods and services produced in an economy without looking at imports. |
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Definition
| people in the labor force who are actively looking for jobs |
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Term
| natural rate of employment |
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Definition
| structional and frictional unemployment that is always in an economy |
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Definition
| A theory stated by Adam Smith which states that the government has no place to interfere with the economy. |
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Definition
| A concept that states that supply creates it's own demand. Was created by John-Baptiste Say in the early 1800s |
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| short-run aggregate supply |
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Definition
| the total amount of goods and services that all firms are able willing and able to produce in the economy. |
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Term
| long-run aggregate supply |
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Definition
| a time period where al production factors have time to adjust to full employment. This curve is vertical at the natural rate of employment. |
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Term
| RAPP - how the Aggregate supply changes due to these factors |
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Definition
R- Resource Prices: changes in input prices, raw materials, or other factors that affect inputs.
A- Actions by the government- Changes in business taxes, subsidies, and regulations
P- Political or environmental phenomena, changes in worker expectations, producer confidence, wars, natural disasters, or other political or environmental phenomena
P- Productivity: Changes in technology, worker education, or other factors that affect productivity. |
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Definition
| the total amount of goods and services the populus is willing and able to purchase in the economy. |
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Term
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Definition
| as interest rates in the U.S. fall, investors tend to put more money into foreign investments. This drives foreign prices up an dlowers U.S. prices, which then leads to a better exhange rate. When American-made goods are cheaper compared to foreign goods, more goods are exported than imported, leading to a better net export rate. |
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Term
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Definition
| as price levels fall, consumers' demand for money increases. This causes interest rates ( which are the price of money) to rise. Higher interest rates cause investment and other interest-sensitive components of aggregate demand to decrease. |
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Term
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Definition
| When prices rise in an economy, the real value of household income declines, and so consumer spending drops. The drop results in a decrease in real GDP. If price levels drop, the value of money and other financial assets is higher, and consumers will spend more. |
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Term
| What affects consumer spending: |
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Definition
consumer wealth: greater income means more consumer spending, while less income means less consumer spending in the economy.
consumer expectations: if consumers expect the economy to do well they will spend more money than if they don't think the economy is going to do well.
consumer indebtedness: if consumers hold more debt, they won't spend as much new money as they would if their debt was low.
Taxes and transfer payments: lower taxes give consumers more money to spend, while higher taxes decrease spending ability. An increase in transfer payments gives consumers more income to save and spend, while a decrease works in the opposite manner. |
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Term
| Marginal propensity to consume |
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Definition
| how much of every extra dollar would be consumed. |
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Term
| Marginal propensity to save |
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Definition
| how much of every extra dollar would be saved |
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Term
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Definition
aids in calculating the GDP when expenditures change
1/ 1- MPC |
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Definition
aids in calculating the GDP when taxes change
Calculated by MPC/MPS |
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Definition
| when the agregate supply is equal to the aggregate demand |
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Definition
| The government's use of taxing and spending policies to battle issues of the economy |
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Definition
| When goods and services are brought into a country. c |
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Definition
| when goods and services are sold to there nations. |
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Definition
| an agreement regarding the amount of each product in regards to the other product being traded. |
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Definition
| a system in which a nation tracks all interactions between nations. This is made up of two accounts; current and capital. The sum of these two accounts must always be zero. |
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Definition
| the record of all goods and services exhanged between nations |
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Definition
| record of trade involving financial assets including stocks, bonds, and real estate; sometimes called the capital account |
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Term
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Definition
| all nonmilitary personell who are employed or unemployed |
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