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 at the operation of a nation's economy as a whole
microeconomics
the part of economics study that looks at the behavior of people and organizations in particular markets
resource development
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 (Scottish economist) 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 privately owned and operated for profit
state capitalism
a combination of freer markets and some government control
under a free market capitalism people have four basic rights...
right to own property, own a business and keep all that business's profits, freedom of competition, freedom of choice
free market
decisions regarding what and how much is produced is made by the market (buyers and sellers negotiating prices for goods and services)
supply
the quality 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 willing to buy at different prices at a specific time
market price
the price determined by supply and demand
supply curve
rises from left to right (higher the price, more sellers willing to sell)
demand curve
falls from left to right (lower the price, higher the quantity demanded)
equilibrium point
the place where quantity demanded and quantity supplied meet, point of intersection
perfect competition
the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product
monopolistic competition
the degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
oligopoly
a degree of competition in which just a few sellers dominate the market
monopoly
a degree of competition in which only one seller controls the total supply of a product or service, and sets the price
benefits and limitations of free markets
benefits: creates wealth, opportunities
limitations: inequality in pay distribution, fosters greed
socialism
economic system based on the premise that some basic businesses should be owned by the government so that profits can be more evenly distributed among the people
brain drain
loss of the best and brightest people to other countries
communism
economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
free-market economies
economic system in which the market largely determines what goods/services get produced, who gets them, and how the economy grows
command economies
economic systems in which the government largely decides what goods/services will be produced, who gets them, and how the economy grows
mixed economies
economic systems in which some allocation of resources is made by the market and some by the government
GDP (gross domestic product)
the total value of final goods and services produced in a country in a given year
GO (gross output)
a measure of total sales volume at all stages of production
unemployment rate
the number of civilians at least 16 y/o who are unemployed and tried to find a job within the prior four weeks
inflation
a general rise in the prices of goods and services over time
disinflation
a situation in which price increases are slowing (inflation rate is declining)
deflation
a situation in which prices are declining
stagflation
situation when the economy is slowing but prices are still going up
CPI (consumer price index)
monthly statistics that measure the pace of inflation or deflation
core inflation
CPI minus food and energy costs
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
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
national debt
the sum of government deficits over time
Keynesian economic theory
the theory that a government policy of increasing spending could stimulate the economy in a recession
monetary policy
the management of the money supply and interest rates by the Federal Reserve