Crash Course Economics- Sean

Business cycle

A cycle or series of cycles of economic expansion and contraction

Deflation

A decrease in the general price level of goods and services

Law of Supply

A fundamental principle of economic theory which states that, all else equal, an increase in price results in an increase in quantity supplied

Labor

A measure of the work done by human beings

Specialization

A method of production where a business or area focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency within the entire system of businesses or areas Example: to specialize in making a type of cloth vs. the finished garment

poverty line

A method used to count the number of poor people, it considers what a family must spend for an "austere" standard of living.

Market basket

A permanent set of goods and services that are bought and sold as staples in a functional economy

Law of Demand

All else being equal, as the price of a product increases (↑), quantity demanded falls (↓); likewise, as the price of a product decreases (↓), quantity demanded increases (↑).

Land

All naturally occurring resources whose supply is inherently fixed (ex. geographical locations, mineral deposits, forests, etc.)

Mixed Economy

An economic system consisting of a mixture of either markets and economic planning, public ownership and private ownership, or free markets and economic interventionism

planned economy

An economy in which production, investment, prices, and incomes are determined centrally by a government

Surplus

An excess of production or supply over demand

Inflation

An increase in a currency supply relative to the number of people using it, resulting in rising prices of goods and services over time

Cost Pull Inflation

Develops because the higher costs of production factors decreases in aggregate supply (the amount of total production) in the economy

Shortage

Excess demand - that is quantity demanded is greater than quantity supplied

trade

Exchange of goods and services

Real GDP

Gross Domestic Product adjusted for inflation

Nominal GDP

Gross Domestic Product not adjusted for inflation

extreme poverty

Living on less than $1 (US) per day.

spectrum

Modern economics are neither completely free market nor planned. There's a wide range of government involvement in countries around the world.

human capital

One special type of capital is the worker's education, knowledge, and skills to produce things.

labor; money

There are two flows present within the model including flows of physical things (goods or ______) and flows of _____ (what pays for physical things).

Capital

Things you need to produce other things; includes machines, factories, infrastructure, etc.

Demand Pull Inflation

Too much money chasing too few goods

Speculation

Trading a financial instrument involving high risk, in expectation of significant returns

Discouraged workers

Unemployed people that were looking for work but have given up

Structural unemployment

Unemployment caused by lack of demand for a worker's specific type of labor

Cyclical unemployment

Unemployment due to a recession

Debt

The accumulation of budget deficits

Voluntary exchange

The act of buyers and sellers freely and willingly engaging in market transactions

Purchasing power

The amount of physical goods and services that can be bought by a given amount of money

Productivity

The effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input.

circular flow model

a diagram that is used to represent the monetary transactions in an economy

Equilibrium Quantity

The quantity demanded or supplied at the equilibrium price

Microeconomics

The study of how consumers, workers, and firms interact to generate outcomes in specific markets-micro means small

Macroeconomics

The study of production, employment, prices, and policies on a nationwide scale- macro means large

Technology

The sum total of knowledge and information that society has acquired concerning the use of resources to produce goods and services.

Scarcity

The tension between unlimited human wants in a world of limited resources- Problems when there is NOT enough of a desired thing

Frictional unemployment

The time period between jobs when a worker is searching for or transitioning from one job to another

productivity

The value of a particular product compared to the amount of labor needed to make it.

GDP (Gross Domestic Product)

The value of all final goods and services produced within a country's border in a specific period of time, usually a year

supply and demand

an economic concept that states that the price of a good rises and falls depending on how many people want it (demand) and depending on how much of the good is available (supply)

Production Possibility Frontier (PPF) Graph

the ability to make one thing as oposed to making many things

Incentives

A set of external (rather than intrinsic) motivators that explain people's choices- examples: stickers for children, Bonuses for workers

Depression

A severe recession

Consumer Price Index

A statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically

Free Market Economy

A system in which the prices for goods and services are set freely by consent between vendors and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority

Market

Any place where buyers and sellers meet to exchange goods and services

Unemployment rate

Calculated by taking the number of people that are unemployed and diving by the number of people in the labor force, times 100

Trade-off

Involves a sacrifice that must be made to get a certain product or experience

Debt Ceiling

Limit on the amount of national debt that can be issues by the U.S. Treasury

Price signals

The information that markets generate to guide the distribution of resources

Natural rate of unemployment

The lowest rate of unemployment that an economy can sustain over a long period

immigration surplus

The number of people coming to live in a place is greater than the number of people leaving it

Inflation rate

The percent change in the price of that "market basket" over time.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand

Interest Rate

The price of borrowing money

opportunity cost

Whatever you give up to do something- example: if you decide to go out to dinner instead of babysitting, the cost to you is the money you did not make babysitting.

Recession

When two successive quarters, or six months, show a decrease in GDP

Inflation

_______ is either caused by consumers bidding up the price of stuff or producers raising prices and producing less because there's an increase in production cost