Economics Unit 2 Vocab Test Questions – Flashcards
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club warehouse store
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store that carries a limited number of brands and items in large quantities and is less expensive than supermarkets
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convenience store
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store open 16 to 24 hours a day, carrying a limited selection of relatively higher-priced items
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private-labeled products
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lower-priced store-brand products carried by some supermarket chains and club warehouse chains
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durability
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ability of an item to last a long time.
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service flow
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amount of use a person gets from an item over time and the value a person places on this use.
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closing costs
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fees involved arranging for a mortgage on it transferring ownership of property.
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points
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fees paid to a lender and computed as a percentage of a loan.
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lease
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long-term agreement describing the terms under which property is rented
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security deposit
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funds a renter lets an owner hold in case the rent is not paid or the appointment is damaged.
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registration fee
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licensing fee, usually annual, paid to a state for the night yo use a car.
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liability insurance
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insurance that pays for bodily injury and property damage
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saving
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setting aside income for a period of time so that it can be used later
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savings account
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account that pays interest, has no maturity date, and from which funds can be withdrawn at any time without penalty
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money market deposit account
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account that pays relatively high interest rates, requires a minimum balance, and allows immediate access to funds
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time deposits
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savings plans that require savers to leave their funds on deposit for certain periods of time
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maturity
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period of time at the end of which time deposits will pay a stated rate of interest
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certificates of deposits
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time deposits that state the amount of the deposit, maturity, and rate of interest being paid.
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stockholders
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people who have invested in a corporation and own some of its shares of stock
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capital gain
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increase in value of an asset from the time it was bought to the time it was sold
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capital loss
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decrease in value of an asset from the time it was bought to the time it was sold
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tax-exempt bonds
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bonds sold by local and state governments; interest paid on the bond is not taxed by the federal government
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savings bonds
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bonds issued by the federal gvernment as a way of borrowing money; they are purchased at half the face value and increase every 6 months until full face value is reached
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Treasury bills
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certificates issued by the U.S. Treasury in exchange for a minimum amount of $1000 and maturing in a few days up to 26 weeks.
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broker
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Person who acts as a go-between for buyers and sellers of stocks and bonds
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Treasury notes
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certificates issued by the US Treasury in exchange for minimum amounts of $1,000 and maturing in 2 to 10 years
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over-the-counter market
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electronic purchase and sale of stocks and bonds, often of smaller companies, which takes place outside the organized stock exchanges
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stock market indexes
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measures of what is happening to a given set of stock prices for a specified list of companies; the most well known is the Dow Jones Industrial Average
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mutual fund
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investment company that pools the funds of many individuals to buy stocks, bonds, or other investments.
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money market fund
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type of mutual fund that uses investors' money to make short-term loans to businesses and banks
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pension plans
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company plans that provide retirement income for their workers
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Keogh plan
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retirement plan for self-employed people that allows them to save up to a maximum of 15% of income and deduct it from their taxable income.
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IRA
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private retirement plan that allows individuals or married couples to save a certain amount of untaxed earnings per year with the interest being tax-deferred
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Roth IRA
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private retirement plan that taxes income before it is saved, but which does not tax interest on that income when funds are used upon retirement
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diversification
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spreading of investments among several different types of accounts to lower overall risk
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demand
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the amount of a good or service that consumers are able and willing to buy at various possible prices during a specified time period
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supply
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the amount of goods and services that producers are able and willing to sell at various prices during a specified time period
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market
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the process of freely exchanging goods and services between buyers and sellers
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voluntary exchange
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a transaction in which a buyer and a seller exercise their economic freedom by working out their own terms of exchange
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law of demand
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economic rule stating that the quantity demanded and price move in opposite directions
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quantity demanded
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the amount of a good or service that a consumer is willing and able to purchase at a given price
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real income effect
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economic rule stating that individuals cannot keep buying the same quantity of a product if its price rises while their income stays the same.
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substitution effect
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economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other
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utility
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the ability of any good or service to satisfy consumer wants
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marginal utility
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an additional amount of satisfaction
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law of diminishing marginal utility
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rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased
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demand schedule
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table showing quantities demanded at different possible prices
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demand curve
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downward-sloping line that graphically shows the quantities demanded at each possible price
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complementary good
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a product often used with another product
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elasticity
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economic concept dealing with consumers' responsiveness to an increase or decrease in the price of a product
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price elasticity of demand
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economic concept that deals with how much demand varies according to changes in price
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elastic demand
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situation in which a given rise or fall in a product's price greatly affects the amount that people are willing to buy
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inelastic demand
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situation in which a product's price change has little impact on the quantity demanded by consumers
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law of supply
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economic rule stating that price and quantity supplied move in the same direction
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quantity supplied
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the amount of a good or service that a producer is willing and able to supply at a specific price.
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supply schedule
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table showing quantities supplied at different possible prices
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technology
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the use of science to develop new products and new methods for producing and distributing goods and services.
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law of diminishing returns
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economic rule that says as more units of a factor of production are added to other factors of production, after some point total output continues to increase but at a diminishing rate
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equilibrium price
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the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
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shortage
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a situation in which quantity demanded is greater than quantity supplied at current price
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surplus
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a situation in which quantity supplied is greater than quantity demanded at the current price.
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price ceiling
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a legal maximum price that may be charged for a particular good or service
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rationing
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the distribution of goods and services based on something other than price
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black market
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"underground" or illegal market in which goods are traded at prices above their legal maximum prices or in which illegal goods are sold
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price floor
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a legal minimum price below which a good or service may not be sold
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entrepreneur
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a person who organizes, manages, and assumes the risk for a business in order to gain profits
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startup
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a beginning business enterprise
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small-business incubator
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private or government funded agency that assists new businesses by providing advice or low-rent buildings and supplies
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inventory
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extra supply of the items used in a business, such as raw materials or goods for sale
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receipts
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income received from the sale of goods and/or services; also, slips of paper documenting a purchase
