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100 Econ Terms

Terms

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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
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

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