Economics Glossary

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