Chapter 2
Terms
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- resource development
- the study of how to increase resources and to create the conditions that will make better use of those resources
- national debt
- the sum of government deficits over time/ overall 8 trillion and growing
- macroeconomics
- the part of economics that looks at the operation of a nations economy as a whole
- command economies
- economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow; socialism, communism
- Communism
- an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production
- Deregulation
- governments remove, reduce, or simplify restrictions on business and individuals with the intent of encouraging the efficient operation of markets.
- Brain drain
- the loss of the best and brightest people to other countries
- Producer price index (PPI)
- an index that measures prices at the wholesale level
- Consumer price index (CPI)
- monthly statistics that measure the pace of inflation or deflation
- Socialism
- an economic system based on the premise that some if not most, basic businesses should be owned by the government so that profits can be evenly distributed among the people
- fiscal policy
- the federal governments efforts to keep the economy stable by increasing or decreasing taxes or government spending
- Disinflation
- a situation in which price increases are slowing (the inflation rate is declining)
- Supply
- the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
- economics
- the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals
- Market price
- the price determined by supply and demand
- free market economies
- economic systems in which the market largely determines what goods and services get produced who gets them and how the economy grows; capitalism
- Monopolistic competition
- the market situation in which a large number of sellers produce products that are very similar but that are perceived by buyers as different e.g t-shirts
- mixed economies
- economic systems in which some allocation of resources is made by the market and some by the government, U.S.A
- Invisible hand
- A phrase coined by Adam Smith to describe the process that turns self directed gain into social and economic benefits for all
- Business cycles
- the periodic rises and falls that occur in all economies over time
- microeconomics
- the part of economics that looks at the behavior of people and organizations in particular markets
- Oligopoly
- form of competition in which just a few sellers dominate the market, e.g automobiles, tobacco, softdrinks
- Foundations of Capitalism
- the right to private property, the right to own a business and to keep all of its profits, the right to freedom of competition, the right to freedom of choice
- Free market
- one in which decisions about what to produce and in what quantities are made by the market
- Deflation
- a situation in which prices are declining
- Perfect competition
- the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product; identical products, e.g corn
- Thomas Malthus
- the belief that that are too many people in the world and not enough food and resources
- depression
- severe recession
- Adam Smith
- create more resources so that everyone could become wealthy; The Wealth of Nations; father of modern economics
- Inflation
- a general rise in the prices of goods and services over time
- unemployment rate
- the number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
- Gross Domestic Product (GDP)
- the total value of final goods and services produced in a country in a given year
- Key economic indicators
- GDP, the unemployment rate, price indexes
- recession
- two or more consecutive quarters of decline in the GDP
- Capitalism
- an economic system in which all or most of the factors of production and distribution are privately owned and operated for profit
- Monopoly
- a market in which there is only one seller for a product or service
- monetary policy
- the management of the money supply and interest rates controlled by the Federal Reserve System