- Absolute Advantage
- One country can produce a good more efficiently than another country
- Adam Smith
- Father of Modern Economics; wrote "Wealth of Nations"
- Aggregate Demand
- The total demand of all people for all goods and services produced in an economy
- Aggregate Supply
- The total supply of all goods and services in an economy
- Allocation
- The process of choosing which needs will be met and how much of the resources will be used to satisfy them
- AMEX (American Stock Exchange)
- Stock market for companies with a yearly income of over $750,000
- Basic Economic Questions
- What to produce, how to produce, and for whom to produce
- Bear Market
- An investor whose concern in the stock market causes him/her to sell securities, thinking the price will fall, thus cutting losses
- Blue Chip Stock
- A stock that sells at a higher price because of public confidence in its long record of steady earnings
- Bond
- A certificate of Debt stating the amount a corporation has borrowed from the holder and terms of repayment
- Broker
- An individual who acts as an agent for others in negotiating contracts, purchases, or sales in return for a fee or commission
- Bull Market
- An investor whose concern in the stock market causes him/her to buy securities, anticipating the price to rise, thus making a profit
- Capital
- The means of production including tools, offices, equipment, and money
- Capitalism
- Means of production are owned by private individuals to produce for profit; production is determined by market forces
- Cartel
- A formal organization of firms in the same industry acting together to make decisions
- Circular Flow
- A model of the economy that summarizes the flows of goods and services production from the four sectors (households, businesses, government, and financial institutions)
- Collective Bargaining
- The process of having a union negotiate with management to determine the terms of employment for all workers rather than each individual
- Command/Social Economy
- The basic economic questions are determined by the government
- Comparative Advantage
- A country benefits from specializing in the production at which it is relatively most efficient
- Competition
- The rivalry between two or more businesses striving for the same consumer market
- Cooperative
- A business that provides services for its members and is not run for profit; members pool their resources to gain some benefit not available to them as an individual
- Corporation
- An organization of people legally bound together through a charter to conduct some type of business
- Debt
- An obligation or liability to pay or render services; something owned for goods or services
- Democratic Socialism
- The means of production are mostly in private hands; higher taxes deal with social services provided by the state
- Dividends
- The part of a corporation's income paid to its stockholders
- Dow Jones Average
- An index of the relative prices of selected industrial, transportation, and utility stocks; often used to gauge how the market is performing
- Downsizing
- Restructuring a firm and decreasing its size to cost less, be more productive, and become a more efficient operation
- Elasticity
- Measurement of the degree of the response of a change in quantity to a change in price
- Entrepreneurs
- Individuals who take the risk of producing a product for a profit
- Equilibrium price
- The price at which the quantity demanded equals the quantity supplied
- Federal REserve System
- The central banking system of the United States
- Franchise
- A contract by which a firm/corporation lets an individual (or group) use their name and sell their product in return for payments being made and requirements being met
- Free Enterprise
- The freedom of businesses to operate competitively for profit
- Interest Rate
- The price paid for the use of money
- Investment
- An increase in the amount of productive capital in the economy
- Labor
- The human factor of production
- Law of Demand
- The quantity demanded of a good will be greater at lower prices
- Law of Supply
- The quantity of goods supplied will be greater at a higher price
- Market Economy
- The basic economic questions are decided by the individuals in the marketplace
- Market Price
- The prevailing price at which merchandise, securities, or commodities are sold
- Merger
- A joining of two companies through one company buying more than one half of the other company's stocks
- Minimum Wage
- The lowest wage that can be paid for certain kind of work
- Mixed Economy
- The basic questions are resolved by a mixture of market forces with government direction
- Monetary Policy
- The changing of the quantity of money in the economy in order to reduce unemployment, keep prices stable, and promote economic growth
- Monopoly
- A market organization in which there is only one seller of a product
- NASDAQ (National Association of Securities and Dealers Automated Quotations)
- A stock market that deals strictly with technology
- Natural Resources (Land)
- Any material produced by nature that can be used to produce goods or provide services
- NYSE (New York Stock Exchange)
- Stock market of the largest companies
- Oligopoly
- A market organization in which there are relatively few sellers of a product
- Opportunity Cost
- The value of any alternative that you must give up when you make a choice
- P/E Ratio
- The price of stocks expressed in terms of a multiple of the earnings per share
- Partnership
- A form of business in which there are two owners
- Preferred Stock
- The portion of a corporation's stock that has a priority or preference over the common stock in the distribution of dividends and assets, usually owned by employees
- Production Possibilities Frontier (PPF)
- All possible combinations of two goods that an economy can produce in a certain period of time, under the conditions of present technology, no unemployed resources, and efficient production
- Profit
- Net returns after subtracting total costs from total revenue
- Salaries
- A fixed amount of money paid to a person on a regular basis
- Savings
- The unspent income that households do not spend on goods or services; sums of money stored when prices are reduced
- Scarcity
- People's wants and needs are greater than the resources available to satisfy them
- SDI (State Disability Insurance)
- A partial wage-replacement insurance plan for California workers that provides affordable, short-term benefits to eligible workers who suffer a loss of wages when they are unable to work
- Short Sell
- Selling a stock borrowed from a broker
- Social Security Tax
- A tax that provides disability and retirement for most working people
- Sole Proprietorship
- A form of business in which there is one owner
- Specialization
- Concentrating the activity of a unit of production resource on a single task or operation
- Standard & Poor's (S&P 500)
- A major share price index, based on the performance of 500 widely held US stocks
- State Socialism (Communism)
- Means of production are in the hands of the government, economic decisions are made by a central authority, and all wages are set
- Stock
- Shares of ownership in a company
- Surplus
- The quantity supplied of an item at a given price exceeds the quantity demanded
- Trade Off
- The choice between alternative uses for a given quantity of a resource
- Traditional Economy
- The basic economic questions are answered by social customs
- Unemployment
- Being willing and able to work, and actively seeking work, but not currently working
- Union
- An organization formed to protect the rights of workers
- Wages
- A payment for labor or service
