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.
macroeconomics
the part of economics study that looks the operation of a nation's economy as a whole.
microeconomics
the part of economics study that looks at the behavior of people and organization in particular markets.
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
resource developement
the study of how to increase resources and to create the conditions that will make better use of those resources.
invisible hand
a phrase coined by Adam Smith to describe the process that turns self directed gain into social and economic benefits for all.
capitalism
an economic system in which all or most of the factors of production and distribution are pricately owned and operated for profit.
the fundations of capitalism
1 the right to own private property,2 to own a business and keep all that business's profits,3 to freedon of competition,4 to freedom of choice.
supply
the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
demand
the quantity of products that people are will to buy at different prices at a specific time.
market price
is dertermined by supply and demand. it is the price toward which the market will trend.
the equilibrium point
the place where quantlty demanded and supplied meet
four different degree of competition
1perfect competition2 monopolistic3 oligopoly4 monopoly
perfect competition
exists when there are many sellers in a market and none is large enough to dictate the price of a product.
monopolistic competition
a large number of sellers produce very similar products that buyers neverherless perceive as different, such as hot dogs, sodas, personal computers, and T-shirts.
oligopoly
is a degree of competition in which just a few sellers dominate a market, as we see in tobacco,gasoline, automobiles, aluminum aircraft
monopoly
occurs when one seller controls the total supply of a product or service, and sets the price. in the US laws prohibit the creation of monopolies.
socialism
an economic system based on the premise that some, if not most, basic businesses should owned by the government to that profits can be more evenly distributed among the people.
benefits of socialism
the major benefits of socialism is supposed to be social equality
the negative consequences of socialism
this loss of the best and brightest people to other countries is called a brain drain.?????????
communism
An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
free-market economic
economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grow.
command economics
economic system in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow.
mixed economies
exist where some allocation of resources is made by the market and some by the goverment.
GDP gross domestic product
the total value of final goods and services produced in a country in a given year.US $14 trillion
3 indicators of economic conditions
1 the gross domestic product2 the unemployment3 price indexes
unemployment rate
refers to the percentage of civillians at least 16 years old who are unemployed and tried to find a job whthin the prior four weeks.
frictional unemployment
quit work, unemployment that occurs when people take time to find a job
structural unemployment
skill or location
cyclical unemployment
unemployment that rises during economic downturns and falls when the economy improves
seasonal unemployment
unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season
inflation
a general risse in the prices of goods and services over time
disinflation
a situation in which price increases are slowing the inflation rate is decling
deflation
a situation in which price are declining
stagflation
a situation when the economy is slowing but prices are going up anyhow
CPI consumer price index
monthly statistics that measure the pace of inflation or deflation
PPI producer price index
an index that measures prices at the wholesale level
business cycles
the periodic rises and falls that occur in economies over time.
recession
two or more consecutive quarters of decline in the GDP
depression
a severe recession, usually accompanied by deflation.
fiscal policy
the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.
taxation
the practice of requiring people to pay taxes to support a government
deficit
the property of being an amount by which something is less than expected or required??
national debt
the sum of government deficits over time
keynesian economic theory
the theory that a government policy of increasing spending or cutting taxes could stimulate the economy in a recession
monetary policy
the management of the money supply and interest rates by the Federal Reserve Bank
major tool for managing US economy
fiscal policy(government taxes and spending)
monetary policy (the Fed's control over interest rates and the money supply)
what are the two branches of economics
major branches of economics: macroeconomics studies and microeconomics.
Adam Smith
-Ahead of his time- Father of Modern Economics
- Coined the "Invisible Hand" theory 1776
<inquiry into the Nature and Causes the wealth of nation>
inflation and price indexes
price indexes help gauge the health of the economy by measuring the levels of inflation, disinflation,deflation,and stagflation.