trade balance
exports - imports
trade surplus
exports > imports
trade deficit
imports > exports
imports
goods produced abroad and sold domestically
exports
goods produced domestically and sold abroad
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
negative externalities
by-products of production or consumption that impose costs on third parties
example: pollution, traffic, etc.
positive externalities
by-products of consumption or production that benefit third parties
example: vaccinations, etc.
public goods and services
goods and services provided by the government through taxes; benefits public
example: military, healthcare, education, roads, parks, etc.
recession
decreases in GDP for two consecutive quarters; (6 months in a row)
depression
recession longing longer than two or more years
business cycles
overtime GDP expands and contracts repeatedly
government spending
includes spending by all levels of government on final goods and services
short run
the time period in which at least one input is fixed
long run
the time period in which all inputs can be varied
circular flow model
a simplified representation of how the economy's transactions work together