Adam Smith
Author of the Wealth of a Nations
Aggregate Demand
Total amount of goods and services
Aggregate Supply
Total supply of all the goods and services available in an economy
Assets
All the property and possessions of a person or company
Barter
Exchanging one good for another
Base Year
Year serving as a point of comparison for other years in a price index
Blue Collar Worker
Industrial or factory worker who receives an hourly wage rage rather than a salary
Capital
Equipment and factories used in the production of goods and services
Capital Good
Tool or equipment used to produce other goods
Capitalism
Economic system where the factors of production are privately owned
Collateral
Property or other security used to guarantee the repayment of a loan
Collective Bargaining
When labor union leaders negotiate a contract by representing all union members
Command Economy
Economic system central authority which makes major decisions
Common Stock
Certificate of ownership in a company which entitles the share holder to vote for the board of directors
Communisn
Economic system in which all means of production are owned by the state
Consumer
One who buys goods and services for personal use
Consumer Price Index
A measure of changes in the prices of goods and services commonly purchased by typical households
Corporation
Type of organization where the business is recognized as a legal entity with the right to sell stock
Credit Union
Nonprofit cooperative that accepts deposits makes loans and provides other financial services
Currency
Paper money and coins that make up the money supply of a nation
Cyclical Unemployment
Unemployment that is caused by a downturn in the business cycle
Demand
Amount of a good or service that consumers are willing and able to buy at a given price at a given time
Depression
Prolonged period with large numbers of unemployed declining incomes and economic hardship
Discount Rate
Interest rate charged by the federal reserve for loans to member banks
Dividend
A portion of corporate profits paid to stockholders
Division of Labor
Separating tasks in the process of production assigning different tasks to different workers
Dow Jones Average
30 representative stocks used to monitor price changes on the New York Stock Exchange
Economics
Social science dealing with the production distribution and consumption of goods and services
Entrepreneur
Person who takes the risk of a new business enterprise
Equilibrium Price
Determined by the intersection of the supply and demand curves on a graph
Exchange Rate
Value of one currency expressed in terms of another
Expansion
Period of growth in an economy
Factor Market
That part of the economy where labor and resources are sold
Factors of production
Land labor capital and entrepreneurship
Fiat Money
Money by government decree
Fiscal Policy
Government programs of spending and taxation to promote frosted economic goals for the nation
Fixed Expense
A cost that does not change from month to month a predictable part of am individual or business budget
Frictional Unemployment
Unemployment caused by people changing jobs
Gross Domestic Pdoduct
Total value of all the goods and services produces within a country in a given year
Inflation
A rise in the general level of prices
Karl Marx
Author of the communist manifesto
Labor Union
Organization of workers that negotiates with employers for better pray benefits and working conditions
Laissez Faire
French term which means "allow to do" the philosophy that government should stay out of the market
Law of Demand
Rule stating that more of a product will be consumed at a lower price and less will be consumed at a higher price
Law of Supply
Rule which states that more of a product will be produced when the price is high and less will be produced when the price is low
Limited liability
Situation where the responsibility of an owner for the debt of a company is restricted to the amount invested in the firm
Macroeconomics
Study of an economy as a whole
Market Econkmu
An economy in which h the government has little to say about what how and for whom goods are produced the factors of production are privately owned
Microeconomics
Branch of economics which deals with the units within an economy households businesses and industries
Minimum Wage
Lowest amount which can legally be paid to an employee
Mixed Economy
Free enterprise system with some government involvement
Monetary policy
Plan of the government to regulate the money supply in the nation
Monopoly
When one company controls the market for a certain product no competition
NAFTA
Agreement in 1993 to reduce tariffs between the U.S Canada and Mexoco
National Debt
Total amount of money a nation owes its creditors
Nationalization
When operations previously controlled NY the private sector are taken over by the government
Oligopoly
A market where a few large suppliers control the supply of a product
Opportunity Cost
The value lost when one alternative is chosen over another
Partnership
An unincorporated business owned and run by two or more people
Peak
The point in a business cycle when production employment and wages are at their gighestc
Perfect Competition
An ideal market condition characterized by a large number of independent well informed buyers AMD sellers who all have access the market
Preferred Stock
Certificate of ownership in a corporation which does not entitle the holder to vote but does give claim to the assets of the company before the common shareholder
Price Ceiling
Maximum legal price that can be charge for a product
Price Rate
The lowest interest rate which banks charge their most reliable customers
Principal
The amount borrowed when taking out a loan
Privatization
The conversation of state owned property to private ownership
Profit
The difference between revenue received and the cost of production
Progressive Tax
A tax where the percentage paid in take increases as the level of income increases
Shortage
The situation which exists when the quantity demanded is greater than the quantity supplied
Socialism
An economic system where the government controls the major means of production but property and other businesses may be privately owned
Sole proprietorship
Unincorporated business owned and run by one person
Specialization
When each workers performs a specific task in production
Stock
A share or ownership in a corporation
Strike
An organized work stoppage by employees or union members
Structural unemployment
Unemployment caused by changes in technology or reduced demand for certain products
Subsidy
Government payment to encourage a certain industry or economic activity
Substitute Product
A product that a purchaser may use in place of another product if the demand for one goes up the demand for the other usually goes down
Supply
The amount of a good or service that producers are willing to produce at a given time
Supply Curve
A graphic representation of the quantity producers are willing to produce at different prices
Surplus
Exists when the quantity supplied of an item is greater than the quantity demanded
Tariff
A tax on an imported product
Trade Deficit
A condition in international trade when the value of the imports into a nation is greater than the value of its exports
Transfer Payment
A payment made by the government to someone who does not produce a good or service in return
Trough
The lowest point in a business cycle demand production and wages are at their lowest price
Truth In Lending Laws
Requires that a firm making a loan disclose all the information about the cost of that loan
Unemployment Rates
Percentage of the civilian workforce who are available for a job but do not have one
Unlimited Liability
When an owner is fully responsible for the debts and losses of a company
Unskilled Labor
Workers who are not trained to do a specific task or operate specialized machinery
White Collar Worker
Business or professional worker usually work for a salary than an hourly wage
Consumer Good
A finished product used by an individual for personal use