Cost Benefit Analysis
Elasticity of Demand
A measure of how consumers react to a change in price.
Elasticity of Supply
A measure of the way quantity supplied reacts to a change in price.
Stock Market
A system for buying and selling shares of companies.
Socialism
An economic system in which the factors of production are owned by the public and operate for the welfare of all.
Command Economy
An economic system in which the government controls a country's economy.
Multinational Corporation
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.
Ability To Pay Principle
Belief that taxes should be paid according to level of income regardless of benefits received.
Recession
Decline of real GDP lasting longer than 2 quarters.
Division of Labor
Division of work into a number of separate tasks to be performed by different workers.
Market Economy
Economic system in which supply, demand, and the price system help people make decisions.
The Fed
Privitly owned, publicly controled, central bank of the United States
Price Index
Statistical series used to measure changes in the price level over time.
Income Effect
The change in consumption resulting from a change in real income.
Capital Good
Tool, equipment, or other manufactured good used to produce other goods and services.
Cost Benefit Analysis
Way of thinking that compares the cost of an action to its benefits.
Durable Good
a good that lasts for at least three years when used regularly.
Vertical Merger
combination of firms involved in different steps of manufacturing or marketing.
Horizontal Merger
combination of two or more firms producing the same kind of product.
Unit Elastic
elasticity where a change in the independent variable (usually price) generates a proportional change of the dependent variable (quantity demanded or supplied).
Real GDP
gross domestic product (GDP) adjusted to account for changes in currency values and price changes.
Demand Schedule
listing showing the quantity demanded at all possible prices that might prevail in the market at a given time.
Economic Interdependence
mutual dependency of one person's, firm's, or region's economic activities on another's.
Protective Tariff
tax on imports used to raise the cost of imported goods and thereby protect domestic producers.
Payroll Taxes
tax on wages and salaries deducted from paychecks to finance Social Security and Medicare.
Economic System
way in which a nation uses its resources to satisfy its people's needs and wants.
