question

Absolute Advantage

answer

The ability to produce more of a good than all other producers.

question

Absolute(or money) prices

answer

The price of a good measured in units of currency

question

accounting profit

answer

The difference between total revenue and total explicit cosy

question

all else equal

answer

The assumption that all other variables are held constant so that we can predict how a change in one variable affects a second. Also known as the "ceteris paribus" assumption

question

allocative effiency

answer

Production of the combination of goods and services

question

average fixed cost(AFC)

answer

Total fixed cost divided by output

question

Average product(APL) of labor

answer

Total product divided by the labor employed

question

Average tax rate

answer

The proportion of total income paid to taxes

question

Average total cost(ATC)

answer

Total cost divided by output

question

Average variable cost(AVC)

answer

Total variable cost divided by output

question

Capitalist market system(capitalism)

answer

An economic system based upon the fundamentals of private property, freedom, self-interest, and prices

question

Cartel

answer

Firms that agree to maximize their joint profits rather than compete

question

Circular flow of economic activity(or circular of goods and services)

answer

A model that shows how households and firms circulate resources, goods, and incomes through the economy. This basic model is expanded to include the government and the foreign sector.

question

collusive oligopoly

answer

Models where firms agree to work together to mutually improve their situation

question

comparative advantage

answer

The ability to produce a good at lower opportunity cost than all other producers

question

complementary goods

answer

Two goods that provide more utility when consumed together than when consumed separately

question

constant returns to scale

answer

The horizontal range of long-run average total cost where LRAC is constant over a variety of plant sizes

question

constrained utility maximization

answer

Given prices and income, a consumer stops consuming a good when the price paid for the next unit is equal to the marginal utility recieved

question

consumer surplus

answer

The difference between a buyer's willingness to pay and the price actually paid.

question

cross-price elasticity of demand

answer

a measure of how sensitive the consumption of good X is to a change in the price of good Y

question

deadweight loss

answer

The lost net benefit to society caused by a movement from the competitive market equilibrium.

question

demand curve

answer

Shows the quantity of a good demanded at all prices

question

demand for labor

answer

Shows the quantity of labor demanded at all wages. Labor demand for a firm hiring in a competitive labor market is MRPL.

question

demand schedule

answer

A table showing quantity demanded for a good at all prices

question

derived demand

answer

Demand for a resource arising from the demand for the goods produced by the resources

question

determinants of demand

answer

the external factors that shift demand to the left or right

question

determinants of supply

answer

the external factors that influence supply. When these variables change, the entire supply curve shifts to the left or right

question

disequilibruim

answer

Any price where the quantity demanded does not equal the quantity suppiled

question

diseconomies of scale

answer

The upward part of the long-run average total cost curve where LRAC rises as plant size rises

question

domestic price

answer

The equilibrium price of a good in a nation without trade

question

dominant strategy

answer

A strategy that is always the best strategy to pursue, regardless of what a rival is doing

question

economic costs

answer

The sum of explicit and implicit costs of production

question

economic growth

answer

The increase in an economy's PPF over time

question

economic profit

answer

The difference between total revenue and total economic cost

question

economics

answer

The study of how society allocates scarce resources

question

economies of scale

answer

The downward part of the long-run average total cost curve where LRAC falls as plant size rises

question

egalitarianism

answer

The philosophy that all citizens should receive an equal share of the economic resources

question

elasticity

answer

Measures the sensitivity, or responsiveness, of a choice to a change in an external factor

question

elasticity along the demand curve

answer

At the midpoint of a linear demand curve, Ed=1. Above the midpoint demand is elastic, and below the midpoint demand is inelastic

question

excess capacity

answer

The difference between the long run output in monopolistic competition and the output at minimum average total cost

question

excess demand

answer

The difference between quantity supplied and quantity demanded. A shortage

question

excess supply

answer

The difference between quantity supplied and quantity demanded. A surplus

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excise tax

answer

A per unit tax on a specific good or service

question

explicit costs

answer

Direct, purchased, out-of-pocket costs, paid to resource suppliers outside the firm. Also referred to as accounting costs

question

exports

answer

Goods and services produced domestically but sold abroad

question

factors of production

answer

Inputs or resources that go into the production function to produce goods and services

question

firm

answer

An organization that employs factors of production to produce a good or service that it hopes to profitably sell

question

fixed inputs

answer

Production inputs that cannot be changed in the short run

question

four-firm concentration ratio

answer

The sum of the market share of the four largest firms in the industry

question

free rider

answer

An individual who receives the benefit of a good without incurring any cost for the good

question

free rider problem

answer

The lack of private funding for a public good due to the presence of free riders

question

game theory

answer

An approach for modeling the strategic interactions of firms in oligopoly markets

question

Gini ratio

answer

A measure of income inequality. As the Gini ratio gets closer to zero, the more equally the income is distributed. As the Gini ratio gets closer to one, the more unequally the income is distributed.

question

human capital

answer

The amount of knowledge and skills that labor can apply to the work that they do

question

implicit costs

answer

Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur

question

imports

answer

Goods produced abroad but consumed domestically

question

incidence of tax

answer

The division of a tax between consumers and producers

question

income effect

answer

Due to the higher price, the change in quantity demanded that results from a change in the consumer's purchasing power(or real income)

question

income elasticity

answer

A measure of how sensitive consumption of a good is to a change in consumers' income

question

inferior goods

answer

A good for which demand decreases with an increase in consumer income

question

law of demand

answer

All else equal, when the price of a good rises, the quantity demanded of that good falls

question

law of diminishing marginal returns

answer

As successive units of a variable input are added to a fixed input, beyond some point the marginal product declines

question

law of diminishing marginal utility

answer

In a given time period, as consumption of an item increases, the marginal(additional) utility from that item falls

question

law of increasing costs

answer

As more of a good is produced, the greater is its opportunity(or marginal) cost

question

law of increasing marginal utility

answer

In a given time period, as consumption of an item increases, the marginal(additional) utility from that item falls

question

law of supply

answer

All else equal, when the price of a good rises, the quantity supplied of that good rises

question

least-cost rule

answer

The combination of labor and capital that minimizes total costs for a given production rate is where MP1/PL=MPK/PK

question

long run

answer

A period of time long enough for the firm to alter all production inputs, including the plant size

question

Lorenz curve

answer

A graphical device that shows how a nation's income is distributed across the nation's households

question

luxury

answer

A good for which the proportional increase in consumption exceeds the proportional increase in income

question

marginal

answer

The next unit, or increment of, an action

question

marginal analysis

answer

Making decisions based upon weighting the marginal benefits and costs of that action. The rational decision maker chooses an action if the MB is greater than or equal to MC.

question

marginal benefit(MB)

answer

...The additional benefit received from the consumption of the next unit of a good or service

question

Marginal cost(MC)

answer

The additional cost of producing one more unit of output

question

marginal productivity theory

answer

The theory that a citizen's share of economic resources is proportional to the marginal revenue product of his or her labor

question

marginal product(MPL) of labor

answer

The change in total product in resulting from a change in the labor unit

question

marginal resource cost(MRC)

answer

The change in a firm's total cost from the hiring of an additional unit of an input

question

marginal revenue product of labor(MPR)

answer

The change in a firm's total revenue from the hiring of an additional unit of input

question

marginal tax rate

answer

The rate paid on the last dollar earned, calculated by taking the ratio of the change in the change in income

question

marginal utitility

answer

The change in an individual's total utility from the consumption of an additional unit of a good or service.

question

market

answer

A group with buyers and sellers of a good or service

question

market economy

answer

An economic system in which resources are allocated through the decentralized decisions of firms and consumers

question

market equilibruim

answer

Exists the only price where the quantity supplied equals the quantity demanded. Or, it is the only quantity where the price consumers are willing to pay is exactly the price producers are willing to accept

question

market failure

answer

The inability of the free market to allocate resources efficiently

question

market power

answer

The ability to set a price above the perfectly competitive level

question

monopolistic competition

answer

A market structure characterized by a few small firms producing a differentiated product with easy entry into the market

question

monopoly

answer

A market structure in which one firm is the sole producer of a good with no close substitutes in a market power i.e. wage setter

question

monopsony

answer

A factor market in which there is a sole firm that has market power

question

natural monopoly

answer

The case where economies of scale are so extensive that is less costly for one firm to supply the entire range of demand than for multiple firms to share the market

question

necessity

answer

A good for which the proportional increase in consumption is less than the proportional increase in income

question

negative externality

answer

The existence of spillover costs upon third parties from the production of a good

question

noncollusive oligopoly

answer

Models of industries in which firms are competitive rivals seeking to gain at the expense of their rivals

question

nonrenewable resources

answer

Natural resources that cannot replenish themselves

question

normal goods

answer

A good for which demand increases with an increase

question

normal profit

answer

The opportunity cost of the entrepreneur's talents. Another way of saying the firm is earning zero economic profit

question

oligopoly

answer

A very diverse market structure characterized by a small number of interdependent large firms, producing either a standardized or differentiated product in a market with a barrier to entry.

question

opportunity cost

answer

The value of the sacrifice made to pursue a course of action

question

perfectly elastic

answer

In this special case, the demand curve is horizontal, meaning consumers have an instantaneous and infinite response to a change in price

question

perfectly inelastic

answer

In this special case, the demand curve is vertical and there is absolutely no response to a change in price.

question

positive externality

answer

The existence of spillover benefits upon third parties from the production of a good.

question

price ceiling

answer

A legal maximum price above which a product can't be sold

question

price discrimination

answer

The sale of the same product to different groups of consumers at different prices

question

price elasticity of demand

answer

Measures the sensitivity of consumers' quantity demanded for good X when the price of good X changes

question

price elasticity of supply

answer

Measures the sensitivity of producers' quantity supplied for good X when the price of good X changes.

question

price floor

answer

A legal minimum price below which the product cannot be sold

question

prisoner's dilemma

answer

A game where the two rivals achieve a less desirable outcome because they are unable to coordinate their strategies

question

private goods

answer

Goods that are both rival and excludable

question

producer surplus

answer

The difference between the price received and the marginal cost of producing the good

question

productive effiency

answer

Production of maximum output for a given level of technology, into finished goods and services

question

production function

answer

The mechanism for combining production resources, with existing technology, into finished goods and services

question

production possibilities

answer

The different quantities of goods that am economy can produce with a given amount of scarce resources

question

production possibility curve

answer

A graphical device that shows the combination of two goods that a nation can efficiently produce with available resources and technology

question

productivity

answer

The quantity of output that can be produced per worker in a given amount of time

question

profit maximizing resource employment

answer

The firm hires a resource up to the point where MRP=MRC

question

progressive tax

answer

A tax where the proportion of income paid in taxes rises as income rises

question

proportional tax

answer

A tax where the proportion of income paid in taxes is constant no matter the level of income

question

protective tariff

answer

An excise tax levied on an imported good that is produced in the domestic market so that it may be protected from foreign competition

question

public goods

answer

Goods that are both nonrival and nonexcludable

question

quintiles

answer

When you rank household income from lowest to highest, each quintile represents 20 percent of all households

question

quota

answer

A maximum amount of a good that can be imported into the domestic market

question

regressive tax

answer

A tax where the proportion of income paid in taxes decreases as income rises.

question

relative prices

answer

The price of one unit of good X measured not in currency, but in the number of units of good Y that must be sacrificed to acquire good X

question

renewable resources

answer

Natural resources that can replenish themselves if they are not over harvested

question

resources

answer

Also called factors of production, these are commonly grouped into the four categories of labor, physical capital, land or natural resources, and entrepreneurial ability.

question

revenue tariff

answer

An excise tax levied on goods that are not produced in the domestic market.

question

scarcity

answer

The imbalance between limited productive resources and unlimited human wants

question

shortage

answer

A situation in which, at the market price, the quantity demanded exceeds the quantity supplied

question

short run

answer

A period of time too short to change the size of the plant, but many other, more variable resources can be adjusted to meet demand.

question

specialization

answer

Production of goods, or performance of tasks, based upon comparative advantage

question

spillover benefits

answer

Additional benefits to society, not captured by the market demand curve from the production of a good.

question

spillover costs

answer

Additional benefits to society, not captured by the market demand curve from the production of a good

question

subsidy

answer

A government transfer, either to consumers or producers, on the consumption or production of a good

question

substitute goods

answer

Two goods are consumer substitutes if they provide essentially the same utility to the consumer

question

substitution effect

answer

The change in quantity demanded resulting from a change in the price of good relative to the price of other goods

question

supply curve

answer

Shows the quantity of a good supplied at all prices

question

supply schedule

answer

A table showing quantity supplied for a good at various prices

question

surplus

answer

A situation in which, at the going market price, the quantity supplied exceeds the quantity demanded

question

tax bracket

answer

A range of income on which a given marginal tax rate is applied

question

technology

answer

A nation's knowledge of how to produce goods in the best possible way

question

total cost(TC)

answer

The sum of total fixed and total variable costs at any level level of output

question

total fixed costs(TFC)

answer

Production costs that do not vary with the level of output

question

total product(TPL) of labor

answer

The total quantity of output produced for a given quantity of labor employed

question

total revenue

answer

The price of a good multiplied by the quantity of that good sold

question

total revenue test

answer

Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic

question

total utility

answer

The total happiness received from consumption of a number of units of a good

question

total variable costs(TVC)

answer

production costs that change with the level of output

question

total welfare

answer

The sum of consumer surplus and producer surplus

question

trade-offs

answer

The reality of scarce resources implies that individuals, firms, and governments are constantly faced with difficult choices that involve benefits and costs

question

unit elastic demand

answer

Ed=1. The percentage change in price is equal to percentage change in quantity demanded.

question

utility

answer

Happiness, or benefit or satisfaction, or enjoyment gained from consumption of goods or services

question

utility maximizing rule

answer

The consumer chooses amounts of goods X and Y, with their limited income, so that the marginal utility per dollar spent is equal for both goods.

question

utils

answer

A hypothetical unit of measurement often used to quantify utility; aka "happy points"

question

variable inputs

answer

Production inputs that the firm can adjust in the short run to meet changes in demand for the firm's output.

question

world price

answer

The global equilibrium price of a good when nations engage in trade

question

aggregate demand curve

answer

a curve depicting the relationship between real GDP demanded (i.e., expenditures) and the price level in the economy; the aggregate demand curve slopes downward from left to right.

question

aggregate supply curve

answer

a curve defining the relationship between real production and price level.

question

business cycles

answer

fluctuations in real GDP around the trend value; also called economic fluctuations.

question

consumer surplus

answer

the difference between the maximum price a consume is (or would be) willing to pay and the price he or she actually pays.

question

cost-push inflation

answer

inflation created when an increase in the costs of production (wages or raw materials) shifts the short-run aggregate supply (AS) curve to the left; tends to push prices up while reducing the level of real GDP at the same time (stagflation).

question

cyclical unemployment

answer

unemployment that reflects changes in the business cycle; the difference between the official unemployment rate & the natural rate of unemployment.

question

demand-pull inflation

answer

inflation that follows from an increase in aggregate demand, which will cause equilibrium real GDP (Y) to increase and the equilibrium price level (P) to increase.

question

depreciation

answer

when the price of one currency falls relative to another currency, the first currency has depreciated relative to the other one.

question

depression

answer

period in which a recession becomes prolonged and deep, involving high unemployment.

question

elastic

answer

significantly responsive to a change in price.

question

exchange rate

answer

the price of a domestic currency in terms of a foreign currency.

question

expansion

answer

period in which the economy moves from a trough to a peak and a real GDP is increasing; also called a boom.

question

expansionary fiscal policy

answer

enacted when the government deliberately increases its deficit to stimulate the economy; the government increases its spending (increases G), cuts taxes (decreases T), or both, and stimulates the economy by expanding aggregate demand (AD).

question

expansionary monetary policy

answer

monetary policy methods by which the Fed aims to increase the money supply and lower interest rates, thereby creating an increase in output; in pursuit of expansionary policy goals, the Fed can lower the required reserve ratio, lower the discount rate, or purchase government securities on the open market.

question

expenditure approach

answer

a way of measuring the GDP by adding up all spending on final goods and services during a given year.

question

fiscal policy

answer

changes, adjustments, and strategies that the governments implements in spending or taxation to achieve particular economic goals.

question

frictional unemployment

answer

unemployment faced by workers who have lost their jobs because of changing market (demand) conditions & who have transferable skills; unemployment due to the natural frictions of the economy.

question

Gross Domestic Product

answer

the dollar value of production within a nation's border.

question

Gross National Product

answer

the dollar value of production by a country's citizens.

question

hyperinflation

answer

a very high rate of inflation, under which prices go up very rapidly, often more than 1,000 percent in a year. This causes money to become a poor store of value.

question

import quotas

answer

restrictions on the quantity of a good that can be imported

question

inelastic

answer

not significantly responsive to changes in price.

question

inferior good

answer

a good for which there is less demand as income rises; a good the demand for which falls as income rises and rises as income falls; consumer income rises while demand decreases.

question

inflation

answer

an increase in the price level

question

interest

answer

the payment that capital receives in the factor market.

question

labor force

answer

the group of individuals who are either working or actively looking for work; the labor force includes the unemployed: labor force = number of individuals in labor force/number of individuals in the adult population, expressed as a percentage.

question

law of demand

answer

states that as prices rise, people are willing and able to buy less of a good and, hence, the quantity demanded decreases; as prices fall, people are willing and able to buy more, so the quantity demanded increases and the demand curve slopes downwards.

question

law of supply

answer

states that as the price of a good increases, the quantity supplied of a good increases, and as the price of a good decreases, the quantity supplied of the good decreases.

question

LRAS curve

answer

long- run aggregate supply curve

question

marginal propensity to consume (MPC)

answer

the proportion of each additional dollar of income that will go toward consumption expenditures.

question

Marginal Propensity to Save (MPS)

answer

the proportion of each additional dollar of income that is saved.

question

marginal revenue

answer

the addition to total revenue created by selling one additional unit of ouput.

question

market demand curve

answer

the sum of each individual consumer's demand curves for a certain good in a market (e.g., all the individual quantities of Good B demanded at each price).

question

market equilibrium

answer

occurs when supply and demand are balanced such that the market price and the quantity exchanged are under no market pressure to change.

question

market supply curve

answer

the sum of all the quantities of a good supplies by all producers at each price.

question

monetary policy

answer

the deliberate control of the money supply by the Federal government.

question

money multiplier

answer

economic tool used to determine exactly the amount of the new demand deposits that can be created from an initial deposit.

question

monopoly

answer

an industry structure in which there is only one seller for a product.

question

movement along a demand curve

answer

movement up or down a single demand curve, contrasted with movement of the demand curve itself.

question

nominal GDP

answer

the gross domestic product calculated using current-year prices; for example, the nominal GDP for 2001 would calculate the value of production using2001 prices for goods and services. Nominal GDP can vary widely from year to year, due to forces such as inflation.

question

oligopoly

answer

a market with only a few sellers, each offering a product that is largely the same as the others' products; in an oligopoly, there is always a tension between cooperation and competition.

question

opportunity cost

answer

the cost of something in terms of what one must give up to get it.

question

peak

answer

the highest point of a business cycle.

question

Phillips curve

answer

graphic representation of an inverse relationship between wage growth (percentage change in price level, such as inflation) and unemployment.

question

price ceiling

answer

price control set when the market price is believed to be too high.

question

price floor

answer

price control set when the market price is believed to be too low.

question

quantity exchanged

answer

the amount of a good actually sold.

question

real GDP

answer

nominal GDP corrected for inflation; real GDP is calculated using prices from a given base year, which may not be the same as the year being measured or the year in which the calculations are made. Real GDP allows economists to compare changes in production realistically across years, creating a stable price index so that rising prices in general do not increase real GDP.

question

required reserve ratio (RRR)

answer

a specific percentage of checking account deposits that each bank must keep in liquid, zero-interest reserves; this amount is set by the Fed.

question

rule of 70

answer

mathematical approximation used to measure the effect of economic growth; this rule tells us the approximate number of years it will take for some measure (real GDP, price level, savings account, etc.) to double given a known annual percentage increase.

question

scarcity

answer

the conflict between limited resources and unlimited human wants; the basic economic problem facing all societies.

question

simple money multiplier

answer

1/RRR, where RRR is the required reserve ratio expressed as a decimal; if the required reserve ratio is 10% (0.1), the money multiplier is 1/0.1 = 10.

question

SRAS curve

answer

short-run aggregate supply curve

question

stagflation

answer

a type of inflation that occurs when an economy's output (real GDP decreases and its price level rises; production stagnates (as during a recession) while prices (and unemployment) go up.

question

structural unemployment

answer

unemployment faced by workers who have lost their jobs because of changing market (demand) conditions & whose skills don't match the requirements of available jobs.

question

tariff

answer

a special tax imposed on imported goods.

question

trade deficit

answer

a country has a trade deficit if the value of its commodity imports exceeds the value of its commodity exports.

question

trade surplus

answer

a country has a trade surplus if the value of its commodity exports exceeds the value of its commodity imports.

question

trough

answer

the lowest point of a business cycle

question

unemployed

answer

a civilian, non-institutionalized adult is considered to be unemployed when he or she does not have a job but is actively looking for one; unemployment figures reflect the number of individuals meeting this definition who are parts of the labor force.

question

unemployment rate

answer

the percentage of the civilian labor force that is unemployed. The number of persons unemployed divided by the number of persons in the civilian labor force (expressed as a percentage).

question

price index

answer

a measure of the price level, or the average level of prices.

question

hidden unemployment

answer

a person who has been unemployed and searching for a job for so long, that they have given up on finding a job and therefore forfeit unemployment.

question

consumption expenditures

answer

the dollar value of all the goods and services sold to house holds.

question

disposable personal income

answer

the income of households after taxes have been paid

question

government expenditures

answer

the dollar value of goods and services sold to governments.

question

investment expenditures

answer

expeditions by businesses on plant and equipment and the change in business invention.

question

national income (NI)

answer

the income earned by households and profits earned by firms after subtracting.

question

national economic accounts

answer

a comprehensive group of statistics that measures various aspects of the economy's performance.

question

net exports

answer

exports minus imports.

question

business cycle

answer

the long-run pattern of growth and recession.

question

trough

answer

the transition point between economic recession and recovery.

question

recession

answer

a period of slow economic growth, usually accompanied by rising unemployment; two consecutive quarters of declining output.

question

depression

answer

a bad depressingly prolonged recession in economic activity.

question

inflation

answer

rising prices, across the board.

question

demand

answer

the willingness and ability of buyers to purchase a good or service.

question

law of demand

answer

law stating that as a price of a good increases, the quantity demanded of the good decreases, and vice versa.

question

inverse relationship

answer

a relationship between two factors in which the factors move in opposite directions. ex: price increases, then quantity decreases.

question

direct relationship

answer

a relationship between two factors in which the factors move in the same direction.

question

demand schedule

answer

a table showing quantities of a good demanded at varying prices; a table demonstrating the number of units of a good demanded at various points.

question

demand curve

answer

the graphical representation of the law of demand. Shows the amount of a good buyers are willing and able to buy at various prices.

question

normal good

answer

a good the demand for which rises as income rises and falls as income falls; consumer income rises and demand rises.

question

economics

answer

the study of scarcity and choice.

question

individual choice

answer

decisions by individuals about what to do and what not to do.

question

market economy

answer

decisions of individual producers and consumers determine what how and for whom to reduce. Minor Government interference. Economy is run by itself.

question

command economy

answer

government officials make decisions about economy.

question

resource

answer

anything that can be used to produce something else

question

land

answer

anything from the land and/or nature. Ex: minerals, timber, petroleum, cotton.

question

Labor

answer

the effort of workers.

question

entrepreneurship

answer

the efforts of entrepreneurs in organizing resources for production taking risk to create new enterprises and innovating to develop new product.

question

scarce

answer

resource is unavailable in sufficient amounts to satisfy various ways society wants to use it.

question

opportunity cost

answer

real cost of an item is its opportunity cost.

question

microeconomics

answer

the branch of economics that deals with human behavior and choices as they relate to relatively small units--the individual, the business firm, a single market.

question

macroeconomics

answer

the branch of economics that deals with human behavior and choices as they relate to the entire economy.

question

economic aggregates

answer

anything that shows the economy as a whole.

question

Ceteris Paribus

answer

(sayr-iht-us pahr-ih-bos) a Latin phrase meaning "all things constant."

question

purchasing power

answer

the amount of money available to consumers to purchase goods and services.

question

substitution effect

answer

when consumers substitute a similar, lower priced product for a product which is relatively more expensive.

question

diminishing marginal utility

answer

a law stating that as an additional unit of a particular food is consumed the utility (satisfaction) gained decreases.

question

change in quantity demanded

answer

a movement along the demand curve in response to a change in price, ceteris paribus; change in price means move along the demand curve; movement = money.

question

consumer good

answer

an increase or decrease in consumer income will cause a shift in the Demand Curve.

question

demand curve shifts

answer

will shift either to the left(decrease) in demand, or to the right(increase) in demand; shift is caused by a change in one of the non-price determinates for the good.

question

consumer income rise

answer

results an increase in the demand for normal goods and a decrease in the demand for inferior goods.

question

neutral good

answer

consumer income ↑↓, demand will ↑↓.

question

complimentary goods

answer

goods that go together, if price ↑ the demand for both that good and complimentary good ↓.

question

susbtitute goods

answer

goods that compete with one another. If the price for one goes up the demand for the other will go up.

question

changes in consumer expectations

answer

a shift in the demand curve resulting from consumer expectations regarding future income or future price of Goods and Services.

question

number of composition of consumers

answer

(population); then there is a shift in the demand curve resulting from and increase or decrease in market demand, as specific consumption related to demographics is concerned.

question

consumer taste and preferences

answer

a shift of the demand curve resulting from a change in consumer taste and preferences.

question

elastic demand

answer

when the percent of change in quantity demanded is greater than the percent of change in price; when there is a large change in the quantity of a good demanded, and a small change in price of the good.

question

inelastic demand

answer

when the percent of change in the quantity demanded is less than then percent of change in price; when there is a small change in the quantity of a good demanded, and a large change in the price of the good.

question

unit elastic

answer

when the percent of change in the quantity demanded equals the percent of change in price.

question

perfectly elastic

answer

where the demand curve is horizontal, reflecting situation in which any change in price reduces quantity demanded to "0." the result of a competitive market consumers will go elsewhere to purchase the product.

question

total revenue

answer

total revenue (TR) price of a good multiplied by the number of units sold; TR = P*Q.

question

demand elasticity

answer

can be measured by using TR as a gauge; a decrease in TR following an increase in Price = Elastic Demand. When Price and TR move in opposite directions..... P↑/TR↓ or P↓/TR↑

question

a decrease in TR following an increase in price = elastic demand

answer

When Price and TR move in opposite directions..... P↑/TR↓ or P↓/TR↑

question

assets

answer

Resources that represent probable future benefits. Cash, inventory, PP&E

question

liabilities

answer

Highly-likely future sacrifices of resources; claims on assets reflected in terms on a piece of paper. Payables, accruals

question

equity

answer

the owner's net interest = assets minus liabilities = net worth = net book value

question

revenue

answer

Inflows from primary activities, increases to retained earnings. Sales

question

expense

answer

outflows from primary activities, decreases to retained earnings

question

gain

answer

Inflows from adjunct activities, increases to retained earnings. Proceeds from the dispositions of assets.

question

loss

answer

Outflow from adjunct activities, decrease to retained earnings.

question

The Entity Assumption

answer

A business is separate from its owners or other businesses

question

The Going Concern Assumption

answer

The business will be in operation indefinitely

question

The Monetary Unit Assumption

answer

Transactions will be quantified in nominal dollars, or other stable currency, unadjusted for inflation

question

The Period Assumption

answer

Business activities will be reported over specific periods: one-year called the fiscal year and four interim periods, or quarters of a year. A company's FY can start on the 1st day of any month and end on the 31st day the twelfth month later.

question

The Cost Principle

answer

The business will report amounts based on acquisition costs, rather than at FMV, with only selective exceptions.

question

The Realization Principle (Revenue Principle)

answer

The business will report revenue only when realized, i.e. when activities related to selling goods or services are complete and cash collection is reasonably likely, not simply when cash is received.

question

The Matching Principle

answer

Expenses should be "matched" with revenues. This provides a timely connection between sacrifices and rewards in order to facilitate an evaluation of profitability.

question

The Disclosure Principle

answer

Not all information relevant to financial decision-making is quantitative, some is narrative. Information is costly and therefore burdensome on businesses.

question

The Objectivity Principle

answer

Reported information should be based on objective evidence. The results of actual transactions with other entities are the preferred basis for objectivity because it lends independence to the reporting process.

question

The Materiality Principle

answer

The significance of a reportable item determines how it will be reported. Thus, small transactions are usually aggregated and reported together.

question

The Consistency Principle

answer

Business should apply the same accounting choices and methods year after year

question

The Principle of Conservatism

answer

When making accounting choices or deciding on reporting methods, businesses should make these decisions based on understating the value of assets and income.

question

FMV

answer

fair market value

question

FY

answer

fiscal year

question

Four steps in accounting

answer

collection, measurement, classification, presentation

question

Three roles of cash

answer

commodity, liquidity, money capital

question

Current liabilities

answer

require cash within the current accounting period

question

current assets

answer

things that ought to become cash within the current period

question

Long-lived assets

answer

tangible things like buildings and equipment; and intangible things like patents, trademarks and copyrights.

question

Long-term liabilities

answer

obligations that stretch out beyond one year. LTD (loans, bonds or mortgages), Pension obligations and Deferred taxes

question

LTD

answer

long-term debt

question

Paid-in-Capital

answer

An equity: Proceeds from sale of common stock plus any excess contributed by owners.

question

Retained earnings

answer

An equity: Sum of all profits earned by the business not distributed to investors as dividends.

question

COGS

answer

A Direct Expense: Cost-of-goods-Sold

question

SG&A

answer

An Expense: Sales General and Administrative

question

Depreciation

answer

An Expense

question

Interest Expense

answer

A Periodic Expense

question

Direct expense

answer

costs that are directly associated with revenue. COGS, Sales commission, shipping

question

Periodic expense

answer

costs that are billed by time period, regardless of the level of revenue. rent, salaries, insurance premiums, interest expense

question

Indirect expense

answer

costs required to carry-out the sales process but that are neither directly related to sales nor periodic. Utilities, telephone, travel, advertising, training, supplies

question

EBITDA

answer

Earnings Before Interest, Taxes, Depreciation and Amortization

question

EBIT

answer

Earnings Before Interest and Taxes

question

EBT

answer

Earnings Before Taxes

question

Income from Continuing Operations

answer

Net income before Extraordinary Items

question

Extraordinary items

answer

Gains or losses that are both infrequent and unusual

question

Net income

answer

the bottom-line, profit

question

Permanent Accounts

answer

Stock elements. Assets, liabilities, equity

question

Temporary Accounts

answer

Flow elements. Revenue, expenses, gains, losses

question

PP&E

answer

property, plant and equipment

question

Receivable account

answer

A Current asset: memorandum to remind the seller that the buyer owes cash for a purchase.

question

Payable account

answer

A current liability: memorandum to remind the buyer that she owes the seller cash for a purchase.

question

Capital Resources

answer

Man-made goods that are produced for the purpose of producing more goods and services.

question

Entrepreneur

answer

A person who takes rick and gathers the resources to provide new or improved good and service to the marketplace.

question

Human Resources

answer

People performing mental and physical work to produce goods and services.

question

Natural Resources

answer

Resources that occur naturally in and on Earth; these resources are used to make goods and services.

question

Productive Resources

answer

Basic Resources used to produce goods and services: natural resources, human resources, capital resources, and entrepreneurial abilities.

question

Alternatives

answer

Options to be considered when making a decision.

question

Cost/Benefit analysis

answer

Comparing advantages and disadvantages in order to make a decision

question

Criteria

answer

Measures or requirements by which alternatives are judged.

question

Opportunity Cost

answer

The next-best alternative that is given up when a choices is made.

question

Trade-Off

answer

Giving up a little of one thing in order to get a lttle more of something else.

question

Consequence

answer

The result or effect of a person's behavior.

question

Incentive

answer

A reason or reward that motivates people to behave in predictable ways.

question

Income

answer

Money earned during a specific period.

question

Marginal Benefit

answer

The additional benefit of one more unit of some good or service.

question

Wages

answer

Income earned from working

question

Career Cluster

answer

Jobs withing a similar category, e.g., artist and graphic designer, bookkeeper and accountant, chef and dietitian.

question

Human Capital

answer

Knowledge, skills, experience, and attitude that help a person do a job.

question

Productivity

answer

The amount of output per unit of input; e.g., if 5 workers can produce 25 gizmos in one day, the productivity per day is 5 gizmos per worker.

question

SCANS Skills

answer

Guidelines for workplace success

question

Self-assessment

answer

Examining characteristics about yourself

question

work ethic

answer

determination and positive habits on the job. or cooperation with others.

question

Human capital

answer

knowledge, skills, experience, and attitude that help a person do better on the job.

question

fixed expenses

answer

expenses that cannot be easily changed and that remain essentially the same from month to month

question

occasional or periodic expenses

answer

expenses that occur once or a few times a year

question

periodic income

answer

income not earned on a regular schedule

question

planned expenses

answer

spending what you expect and for which you plan

question

Spending plan

answer

a plan for managing income and expenses

question

unplanned expenses

answer

spending for an emergency or an urgent need for something

question

Variable expenses

answer

expenses that can be controlled and that change from month to month

question

ATM

answer

automatic teller machine

question

debit card

answer

A plastic card that is used to deduct funds automatically and immediately from a checking account

question

deposit

answer

adding money to a bank account

question

FDIC

answer

federal deposit insurance corporation. Institutions that have an FDIC designation currently guarantee your deposits up t o$250,000.

question

interest

answer

money paid for the use of someone else's money

question

overdraft

answer

writing a check or using a debit card for an amount that is more than the amount on deposit in a bank account.

question

answer

o code used to get into your private info. to get your own money

question

service charge

answer

the fee charged by a financial institution for certain services it provides to their customers

question

Smart cards

answer

a plastic card that is used for identification or credit or debit card

question

Withdraw

answer

subtracting money from a bank account

question

FICA

answer

Federal Insurance Contributions. Transfer tax because it transfers money from people who are working to those who no longer work are eligible to get money from Social Security, Medicare or disability payments.

question

gross pay

answer

total earnings for total hours worked

question

Income tax

answer

A tax on earnings; every worker who earns a certain amount of money must pay federal income taxes

question

IRS

answer

Internal revenue service; agency that collects federal income taxes

question

Net pay

answer

amount of earnings received after all deductions have been taken into account

question

Payroll deduction

answer

Amount of money automatically subtracted from gross pay for taxes

question

Real estate property tax

answer

A tax paid by people who own homes, businesses, properties, condominiums, or other real estate. Property tax may also be charged on personal property such as cars or boats

question

Take-Home pay

answer

same as net pay

question

Transfer payments

answer

Payments by government to people who don't currently perform productive services

question

Investing

answer

Saving money in order to earn a financial return

question

Long-term goals

answer

goals you plan to achieve in more than three years

question

Medium-term goals

answer

goals you plan to achieve in more than 2 months to three years

question

Saving

answer

the act of putting something aside for later use

question

Scarcity

answer

the economic problem that exist because of unlimited wants and limited resources

question

Short-term goals

answer

Goals you plan to achieve in fewer months than two months

question

Financial intermediary

answer

Banks or Credit unions used to bring savers and borrowers as well as stock buyers or stock sellers to bring them together

question

Interest

answer

the price paid for using someone elses money

question

Demand

answer

the quantity of a good or service that customers are willing and able to pay for

question

profit

answer

the money a business has left over from the products they are selling.

question

Revenue

answer

the money a business receives from there customers

question

Supply

answer

The quantity of a good or service that producers are willing and able to offer for a sale at all possible prices during a period of time

question

Certificate of deposit

answer

A account where your deposit remains for a set period of time called a term

question

Financial risk

answer

the risk of loosing principal and return on a principle

question

inflation

answer

a general increase in the price of goods and services

question

inflation risk

answer

the risk that the value of investments will not increase at least as rapidly as the rate of inflation

question

interest rate risk

answer

the risk that interest rates may change while the saver is locked in to a specific interest rate on a time deposit

question

money market deposit account

answer

An interest-bearing account that offers limited check writing privileges

question

portfolio

answer

A person's or institution's collection of savings and investment

question

Savings instrument

answer

Arrangements by means of which people save money, including savings accounts and U.S Saving bonds

question

Savings account

answer

An interest bearing account that can be opened with a small amount of money; funds can easily be deposited or withdrawn

question

United States Saving bond

answer

Technically a loan to the U.S government upon which you earn interest

question

Compound interest

answer

interest computed on the sum of the principal and previously earned interest

question

Compounding

answer

The practice of leaving interest earned "on deposit" so that it too earns interest

question

Rule of 72

answer

A formula that be used to calculate how long it takes for invested money to double

question

Simple interest

answer

Interest earned on the principal and paid out to a depositor

question

Capital gain

answer

gain from selling stocks or other investments for less than what was paid for them

question

Capital loss

answer

loss from selling stocks or other investments for less than what was paid for them

question

Dividend

answer

Periodic payment distributed from profits of a corporation to its stock holders

question

Equity

answer

the value of property that is owned including shares of stocks in a corporation

question

Stock

answer

A share of ownership in its company

question

Stock market

answer

Where shares of stocks are bought and sold

question

annual fee

answer

the yearly charge for having a credit card

question

Annual Percentage Rate

answer

the total cost of one year expressed as a percentage rate

question

Credit Limit

answer

The maximum amount of credit extended to you by a bank or credit card issuer

question

Finance charge

answer

The total dollar amount you must pay for the credit you use

question

Grace period

answer

A period of time during which you are not charged interest on new purchases

question

inflation

answer

A general increase in prices

question

interest

answer

the price of using credit

question

Late fee

answer

A penalty in addition to interest that is charged if payment is received after the due date

question

Minimum payment

answer

the lowest amount you must pay toward your balance each month

question

collateral

answer

property or other values used as security to guarantee the repayment of a loan. the lender can claim collateral if the buyer fails to repay

question

credit bureau

answer

A firm that collects borrowers' credit histories

question

credit report

answer

A history of the borrowers credit report

question

Credit score

answer

a score used to evaluate a borrowers credit worthiness and likelihood to repay a loan

question

debit to income ratio

answer

A measurement of how much income is being spent on your debt

question

cost benefit analysis

answer

Comparing advantages and disadvantages in order to make a decision

question

Deceptive practices

answer

what a business person may do to fool a customer in order to sell there good or service

question

Decision making grid

answer

a tool used to help people compare items so that they can make a wise consumer decision

question

Absolute Advantage

answer

the ability of one person or nation to produce a particular good at a lower cost than another person or nation.

question

Affirmative Action

answer

the use of policies, programs, and procedures to ensure the inclusion of minorities and women in job hiring, college admission, and the awarding of government contracts.

question

Agency Shop

answer

a workplace that will hire nonunion workers and does not require them to join the union.

question

Aggregate Demand

answer

the amount of goods and services in the economy that will be purchased at all possible price levels.

question

Aggregate Supply

answer

the total amount of goods and services in the economy available at all possible price levels.

question

Antitrust laws

answer

laws that encourage competition in the marketplace.

question

appreciation

answer

an in crease in the value of a currency.

question

appropriations bill

answer

a bill that sets money aside for specific spending.

question

arable

answer

suitable or poducing crops.

question

arbitration

answer

a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides.

question

articles of partnership

answer

a partnership agreement

question

assets

answer

money and other valuables belonging to an individual or business.

question

authoritarian

answer

requiring strict obedience to an authority, such as a dictator.

question

automatic stabilizer

answer

a government program that changes automatically depending on GDP and a person's income.

question

balanced budget

answer

budget in which revenues are equal to spending.

question

balance of trade

answer

the relationship between a nation's imports and exports.

question

bank

answer

an institution for recieving, keeping, and lending money.

question

bank holding company

answer

a company that owns more than one bank.

question

bank run

answer

a widespread panic in which great numbers of peopple try to redeem their paper money.

question

barrier to entry

answer

any factor that makes it difficult for a new firm to enter a market.

question

barter

answer

the direct exchange of one set of goods or services for another.

question

bear market

answer

a steady drop in the stock market over a period of time.

question

block grant

answer

federal funds given to states in lump sums.

question

blue-collar worker

answer

someone who works in an industrial job, often in manufacturing, and who recieves wages.

question

Board of Governors

answer

the seven-member system board that oversees the Federal Reserve System.

question

bond

answer

a certificate issued by a corporation, which promises to repay with interest the amount it borrowed from the buyer.

question

brokerage firm

answer

a business that specializes in trading stocks.

question

budget

answer

a plan for saving and spending.

question

budget deficit

answer

a situation in which the government spends more than it takes in.

question

budget surplus

answer

a situation in which the government takes in more than it spends.

question

bull market

answer

a steady rise in the stock market over a period of time.

question

business association

answer

nonprofit organization that promotes collective business interests for a city, state, or other geographical area, or for a group of similar businesses.

question

business cycle

answer

a period of macroeconomic expansion followed by a period of contraction.

question

business franchise

answer

a semi-independent business that pays fees to a parent company in return for the exlusive right to sell a certain product or service in a given area.

question

business license

answer

authorization to start a business issued by the local government.

question

business organization

answer

an establishment formed to carry on commercial enterprise.

question

call option

answer

the option to buy shares of stock at a specified time in the future.

question

capital

answer

any human-made resource that is used to create other goods and services.

question

capital budget

answer

budget for major capital, or investment expenditures.

question

capital deepening

answer

process of increasing the amount of capital per worker.

question

capital gain

answer

the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller.

question

capital loss

answer

the difference between a lower selling price and a higher purchase price, resulting in a financial loss for the seller.

question

capital market

answer

market in which money is lent for periods longer than a year.

question

cartel

answer

a formal organization of producers that agree to coordinate prices and production.

question

cash transfers

answer

direct payments of money to eligible poor people.

question

census

answer

an official count of the population.

question

central bank

answer

bank that can lend to other banks in times of need.

question

centrally planned economy

answer

economic system in which the central government makes all decisions on the production and consumption of goods and services.

question

certificate of incorporation

answer

license to form a corporation issued by state government.

question

ceteris paribus

answer

a Latin phrase that means "all other things held constant."

question

check clearing

answer

a process by which banks record whose account gives up money and whose account recieves money when a customer writes a check.

question

check register

answer

a booklet used to record checking account transactions.

question

chronic inflation

answer

inflation that rises steadily from month to month over a long period of time.

question

classical economics

answer

the idea that free markets can regulate themselves.

question

closed shop

answer

a workplace that hires only union members.

question

closely held corporation

answer

corporation that issues stock to only a few people, often family members.

question

collateral

answer

property used to secure a loan.

question

collective

answer

large farm leased from the state to groups of peasant farmers.

question

collective bargaining

answer

the process in which union and company representatives meet to negotiate a new labor contract.

question

collusion

answer

an agreement among firms to divide the market, set prices, or limit production.

question

commercial bank

answer

a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits.

question

commodity

answer

a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk.

question

common stock

answer

stock whose dividends are based on market fluctuations.

question

communism

answer

a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government.

question

comparative advantage

answer

the ability of one person or nation to produce a good at opportunity costs that are lower than that of another person or nation.

question

competition

answer

the struggle among producers for the dollars of consumers.

question

complements

answer

two goods that are bought and used together.

question

conglomerate

answer

business combination merging more than three businesses that make unrelated products.

question

Congresssional Budget Office (CBO)

answer

government agency that provides economic data to Congress.

question

consumer cooperative

answer

retail outlet owned and operated by consumers.

question

Consumer Price Index (CPI)

answer

a price index determined by measuring the price of a standard group of goods meant to represent the typical "market basket" of a typical urban consumer.

question

consumer sovereignty

answer

the power of consumers to devide what gets produced

question

contingent employment

answer

temporary jobs or part-time jobs.

question

continuum

answer

a range with no clear divisions.

question

contract

answer

a binding legal agreement.

question

contraction

answer

period of economic decline marked by falling real GDP.

question

contractionary policies

answer

fiscal policies, like lower spending and higher taxes, that reduce economic growth.

question

cooperative

answer

a business organization owned and operated by a group of individuals for their mutual benefit.

question

copayment

answer

part of the cost of a medical visit or procedure that the patient must pay out of pocket.

question

corporate bond

answer

a bond that a corporation issues to raise money in order to expand its business.

question

corporate income tax

answer

a tax on the value of a corporation's profits.

question

corporation

answer

a legal entity owned by individual stockholders.

question

cost

answer

to an economist, cost in an alternative that is given up as the result of a decision.

question

cost-push theory

answer

theory that inflation occurs when producers raise prices to meet increased costs.

question

Council of Economic Advisers (CEA)

answer

a group of three respected economists that could advise the president on economic policy.

question

coupon rate

answer

the interest rate that a bond holder will pay to a bondholder.

question

Craft Union

answer

an organization of workers in a single occupation, or craft.

question

credit

answer

any form of deferred payment.

question

credit bureau

answer

organization providing information on individuals' borrowing and bill-paying habits.

question

creditor

answer

person or institution to whom money is owed.

question

credit rating

answer

an evaluation made by credit bureaus of a borrower's overall credit history.

question

credit union

answer

nonprofit bank owned by its members, often members of a single organization or trade union.

question

creeping inflation

answer

inflation that remains low (1 to 3 percent) for a long time.

question

crowding-out effect

answer

the loss of funds for private investment due to government borrowing.

question

customs duty

answer

a tax on certain items purchased abroad.

question

cyclical unemployment

answer

unemployment that rises during economic downturns and falls when the economy improves.

question

debt rescheduling

answer

lengthening the time of debt repayment and forgiving, or dismissing, part of the loan.

question

deductible

answer

amount of expenses that must be paid out of pocket before an insurer will cover any expenses.

question

deductions

answer

variable amounts that you can subtract, or deduct, from your gross income.

question

default

answer

failure to pay back a loan.

question

Adam Smith

answer

The Wealth of Nations, 1776

question

David Ricardo

answer

Principles of Political Economy, 1817

question

Thomas Malthus

answer

Essays on the Principle of Population, 1798-1826

question

Jean-Baptiste Say

answer

A Treatise on Political Economy, 1803

question

Jeremy Bentham

answer

Utilitarian philosopher, max pleasure min pain

question

William Jevons, Carl Menger, Leon Walras

answer

marginalist revolution

question

William Jevons

answer

diminishing marginal utility

question

Leon Walras

answer

GET

question

Alfred Marshall

answer

Principles of Economics, 1890

question

Carl Marx, Fredrick Engles

answer

Communist Manifesto, 1848

question

Stephen Resnick, Richard Wolff

answer

Knowledge and Class, 1989

question

Thorstein Veblen

answer

the Theory of the Leisure Class, 1899

question

Thomas Kuhn

answer

Structure of Scientific Revolution, 1962

question

Julie Nelson, Marianne Ferber

answer

Beyond Homo-Economicus, A Feminist Theory of Economics, 1962

question

Herman Daly

answer

the Economics of the Steady State, 1974

question

Economics

answer

How to best use limited means in the pursuit of unlimited ends

question

Choices

answer

Economic decisions require individuals to make...

question

Scarcity

answer

All resources are finite, also called...

question

Land, Labor, Capital

answer

3 Economic Resources

question

Opportunity Cost

answer

Value of the next best alternative to the choice you've made

question

Production Possibilities Frontier

answer

Graphic representation of scarcity and allocations of resources/opportunity costs

question

Negative

answer

Slope of the demand curve is...

question

Positive

answer

Slope of the supply curve is...

question

No

answer

Is a point not on the supply and demand graph an efficient level of production or accurate representation of demand?

question

Demand

answer

Price, tastes and preferences, income, population size, price of related goods

question

Supply

answer

Price, environment, production capabilities

question

Inelastic

answer

Type of supply and demand slope when an item is a necessity

question

Elastic

answer

Type of supply and demand slop when an item is not a necessity

question

Low prices

answer

When would a shortage occur?

question

High prices

answer

When would a surplus occur?

question

Change in price

answer

...causes movement along the curve

question

Change in other variables

answer

...shifts entire curve

question

increases (shifts right)

answer

When demand goes up, graph...

question

decreases (shifts left)

answer

When demand goes down, graph...

question

increases (shifts right)

answer

When supply goes up, graph...

question

decreases (shifts left)

answer

When supply goes down, graph...

question

Price

answer

The only variable supply and demand have in common

question

Equilibrium

answer

Where the demand and supply slopes intersect

question

National output

answer

Total spending relative to our capacity to produce

question

National income

answer

Income earned by households participating in the production of goods and services

question

Personal income

answer

Income received by individuals including entitlements, transfer payments, and unemployment

question

Disposable personal income

answer

Money left over to save or spend after taxes/mortgages

question

Labor force

answer

Unfixed number of workers, respond to economic forces and social trends

question

Unemployment

answer

Individuals without a full time job but are seeking one

question

Surplus

answer

What happens when more people work and more taxes are paid?

question

Deficit

answer

What happens when less taxes are paid and less people work?

question

GNP (Gross National Product)

answer

Market value of all final new goods and services produced by labor and property supplied by US residents, regardless of location

question

1991

answer

When did the United States stop using GNP?

question

GDP

answer

Market value of all final new goods and services produced by labor and property supplied by US residents and located in the United States

question

GDP equation

answer

Consumption + business investment + government + (exports-imports) or C + I + G + (x-m)

question

Consumption

answer

What component of the GDP equation is two thirds of the equation, and matters the most?

question

Steady

answer

What kind of growth does the United States want for GDP?

question

Price ceiling

answer

Maximum price for a good or service issued by the government

question

Black markets (competitive markets)

answer

In the case of a price ceiling, what happens when there is a shortage?

question

Price floor

answer

Legal minimum on price that can be charged for a good or service issued by the government

question

Government buys extras

answer

In the case of a price ceiling, what happens when there is a surplus?

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