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