Economics Semester Test Review – Flashcards
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Marginal Utility
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satisfaction or usefulness obtained from acquiring one more unit of a product
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stock
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a certificate documenting the shareholder's ownership in the corporation
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corporation
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an organization that is authorized by law to carry on an activity but treated as though it were a single person
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partnership
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a contract between two or more persons who agree to pool talent and money and share profits or losses
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Sole Proprietorship
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business owned and run by a single person who has the rights to all profits and unlimited liability for all debts of the firm
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inflation
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a general and progressive increase in prices
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economics
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The study how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.
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scarcity
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Basic economic problem facing all societies. Limited quantities of resources to meet unlimited wants
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GDP
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Total dollar value of all final goods and services produced in a country during a single year
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welfare
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governmental provision of economic assistance to persons in need
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recession
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two or more consecutive quarters of decline in the GDP
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depression
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a long-term economic state characterized by unemployment and low prices and low levels of trade and investment. Lowest point in a business cycle.
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European union
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international organization comprised of Western European countries to promote free trade among members
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trade deficit
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An imbalance in international trade in which the value of imports exceeds the value of exports.
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trade surplus
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situation in which a country exports more than it imports
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price ceiling
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a maximum price that can be legally charged for a good or service
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price floor
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a minimum price for a good or service
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NAFTA
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This allows open trade with US, Mexico, and Canada
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quota
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a limitation on imports
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tariff
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a government tax on imports or exports
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absolute advantage
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the ability to produce a good using fewer inputs than another producer
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comparitive advantage
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The situation where someone can produce a good at lower opportunity cost than someone else can
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fiat
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money by government decree has no alternative value or use as a commodity
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commodity money
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A good used as money that also has value independent of its use as money.
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FED
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privately owned, publicly controlled, central bank of the United States
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seasonal unemployment
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unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season
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cyclical unemployment
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unemployment directly related to swings in the business cycle
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entrepreneur
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a person who starts up and takes on the risk of a business
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marginal revenue
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the additional income from selling one more unit of a good
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marginal cost
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the cost of producing one more unit of a good
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diminishing returns
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the stage where output increases at a diminishing rate as more units of a variable input are added
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law of supply
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the principle that suppliers will normally offer more for sale at higher prices and less at lower prices
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surplus
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a situation in which quantity supplied is greater than quantity demanded
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shortage
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a situation in which quantity demanded is greater than quantity supplied
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labor union
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an organization of workers that tries to improve working conditions, wages, and benefits for its members
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monopoly
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control of a product or service by one company
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monopolistic competition
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a market structure in which many companies sell products that are similar but not identical
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oligopoly
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(economics) a market in which control over the supply of a commodity is in the hands of a few producers and each one can influence prices and affect competitors
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law of demand
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consumers buy more of a good when its price decreases and less when its price increases
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mixed economy
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Most common for of economic system that has some combination of traditional, command, and market economies.
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traditional economy
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economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
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market economy
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an economic system based on free enterprise, in which businesses are privately owned, and production and prices are determined by supply and demand. (Capitalism)
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command economy
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a system in which the central government makes all economic decisions
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boycott
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to take part in an organized group refusal to use a product or service as a means of protest
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consumer price index
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index used to measure price changes for a market basket of frequently used consumer items
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stagflation
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a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
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frictional unemployment
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A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.
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structural unemployment
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unemployment that occurs when workers' skills do not match the jobs that are available
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factors of production
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economic resources: land, capital, labor, and entrepreneurial ability
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perfect competition
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market structure with many well-informed and independent buyers and sellers who exchange identical products. Example=salt
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opportunity cost
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Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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free enterprise economy
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market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention
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market
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the world of commercial activity where goods and services are bought and sold local, regional, national, or global
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trade-off
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alternatives that must be given up when one is chosen over another
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strike
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union organized work stoppage designed to gain concessions from an employer
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mediation
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the process of bringing in a neutral third person or persons to help settle a dispute
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business cycle
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systematic changes in real GDP marked by alternating periods of expansion, contraction, and possibly recessions and depressions
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stock exchange
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a place where shares in a company or business enterprise are bought and sold
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substitute
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a competing product that consumers can use in place of another
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subsidy
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government payment to encourage or protect a certain economic activity
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circular flow model
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A model that shows the flow of goods and services and the interaction among households, businesses, and banks
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compliment
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products that increase the use of other products
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product market
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market where goods and services are offered for sale
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factor market
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market where productive resources are bought and sold
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socialism
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An economic system in which government owns some factors of production and has a role in determining what and how goods are produced to even out society.
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Inelastic demand
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A situation in which an increase or a decrease in price will not significantly affect demand for the product
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elastic demand
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A situation in which consumer demand is sensitive to changes in price
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equilibrium
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the point at which quantity demanded and quantity supplied are equal
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bull market
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Rising stock market
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bear market
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a stock market with declining stock prices
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FDIC
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a federally sponsored corporation that insures accounts in national banks and other qualified institutions
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FOMC
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the most powerful committee of the Fed, because it makes the decisions that affect the economy as a whole by manipulating the money supply
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exports
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Goods and Services sold to other countries
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imports
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goods brought into a country
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hyperinflation
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inflation that is out of control. Over 500%.
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creeping inflation
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inflation in the range of one to three percent each year.
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galloping inflation
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a more intense form of inflation that can go as high as 100 to 300 percent.
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stock market
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A system for buying and selling shares of companies
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share
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one portion of ownership in a corporation
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sales tax
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a tax based on the cost of the item purchased and collected directly from the buyer
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property tax
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a tax on the value of a property
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income tax
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a tax on people's earnings
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sin tax
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relatively high tax to raise revenue and discourage consuption of a socially undesirable product
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estate tax
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a levy imposed on the assets of one who dies
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April 15
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deadline for filing your income tax return
