Economics Chapter 2 Vocab

Capital

Tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services.

Wages

income paid for the services of labor

Circular Flow Model

A model of the economy that shows the circular flow of expenditures and incomes, that result from decision makers' choices and the ways those choices interact to determine what, how, and for whom goods and services are produced

Market

Any arrangements that brings buyers and sellers together and enables them to get information and do business with each other

Government Goods and Services

Goods and services that are bought by governments

Consumption Goods and Services

Goods and services that are bought by individuals and used to provide personal enjoyment and contribute to person's quality of life

Export goods and services

Goods and services that are produced in one country and sold in other countries

Capital Goods

Goods that are bought by businesses to increase their productive resources

Profit (or loss)

Income earned by an entrepreneur for running a business

Interest

Income paid for the use of capital

Rent

Income paid for the use of land

Households

Individuals or groups of people living together

Goods Markets

Markets in which goods and services are bought and sold

Factor Markets

Markets in which the services of factors of production are bought and sold

Land

The "gifts of nature," or natural resources, that we use to produce goods and services

Personal Distribution of Income

The distribution of income among households

Functional distribution of Income

The distribution of income among the factors of production

Exports

The goods and services that firms in one country sell to households and firms in other countries

Imports

The goods and services that households and firms in one country buy from firms in other countries

Enterperneurship

The human resources that organizes labor, land, and capital to produce goods and services

Firms

The institutions that organize the production of goods and services

Human Capital

The knowledge and skill that people obtain from education, on-the-job training, and work experience

Factors of Production

The productive resources that are used to produce goods and services-land, labor, capital, and enterprenurship

National Debt

The total amount that the federal government has borrowed to make expenditures that exceed tax revenue-to run a government budget deficit

Labor

The work time and work effort that people devote to producing, goods and services