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economics new vocab part 2


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balance of payments
the difference between the money flowing into a country and the money flowing out of a country
real GDP
gross domestic product adjusted for inflation
command economy
an economic system where a central authroity makes the major decisions
a period of rising prices (inflation) combined with increases in unemployment (recession)
the prime interest rate
the interest rate banks offer thier most preferred customers
disposable income
income available to consumers after taxes are deducted
opportunity cost
the value in time, money, and resources given up in making a choice
supply side economics (trickle down economics)
the theory that government can encourage economic growth by helping businesses
economic model
a table, graph, or equations that are used to help understand economic behavior
equilibrium price
the price where the quantity supplied equals the quantity demanded
laffer curve
a model showing that lower tax rates will stimulate more tax revenue collected
adam smtih's invisible hand theory
a theory that states each person acting for there own well being will serve the interests of society as a whole
global economy
the national economies of nations merged into a larger world economy
an economic system where the resources need to reproduce goods and services are owned by the government
a government subsidy
a government payment to encourage or protect a certain economic activity
interest vs interest income
interest is the price for borrowed money; interest income is what is earned by one who loans money
national debt
the total amount of money the federal government borrows, the annual deficits combined
aggregate supply
the total value of goods and services that all firms produce in a specified period of time
an item of value such as money, stock, and land
elasticity of demand/supply
how sensitive changes in the quantitity demanded are to changes in rpcies
investment spending
business decisions to spend on capital goods to promote economic growth
a bond
a loan of money
a tax placed on imported products
protectionist trade policy
a foreign trade policy that protects domestic producers with tariffs or quotas
trade deficit
trade where spending on imports exceeds money made from selling exports

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