Chapter 1 Flashcards
(36 cards)
Budget Deficit
The condition in which a nation spends more than it takes in from taxes
Business
Individuals or organizations who try to earn a profit by providing products that satisfy people’s needs
Capital
The funds used to acquire the natural human resources needed to provide products; also called financial resources
Capitalism (free enterprise)
An economic system in which individuals own and operate the majority of businesses that provide goods and services
Communism
First described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources
Competition
The rivalry among businesses for consumers’ dollars
Demand
The number of goods and services that consumers are willing to buy at different prices at a specific time
Depression
A condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced
Economic contraction
A slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers
Economic expansion
The situation that occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment
Economic system
A description of how a particular society distributes its resources to produce goods and services
Economics
The study of how resources are distributed for the production of goods and services within a social system
Entrepreneur
An individual who risks his or her wealth, time, and effort to develop for profit an innovative product or way of doing something
Equilibrium price
The price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time
Financial resources
The funds used to acquire the natural and human resources needed to provide products; also called capital
Free-market system
Pure capitalism, in which all economic decisions are made without government intervention
Gross domestic product (GDP)
The sum of all goods and services produced in a country during a year
Human resources
The physical and mental abilities that people use to produce goods and services; also called labor
Inflation
A condition characterized by a continuing rise in prices
Mixed economies
Economies made up of elements from more than one economic system
Monopolistic competition
The market structure that exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell are small
Monopoly
The market structure that exists when there is only one business providing a product in a given market
Natural resources
Land, forests, minerals, water, and other things that are not made by people
Nonprofit organizations
Organizations that may provide goods or services but do not have the fundamental purpose of earning profits
