Econ Terms

Question 1

spending by households on goods and services, with the exception of the purchase of new housing

Answer 1

Consumption

Question 2

Coins and bills in the hands of the public

Answer 2

Currency

Question 3

conditions that prevent firms from freely entering or exiting a market

Answer 3

Barriers to Entry

Question 4

severe recession

Answer 4

Depression

Question 5

graphical depiction of relationship between level of desired expenditures in an economy and the price level

Answer 5

Aggregate demand curve

Question 6

graphical depiction of relationship between quantity of goods and services firms which to supply and the price level

Answer 6

Aggregate supply curve

Question 7

total output divided by the quantity of labor employed in its production

Answer 7

Average labor productivity

Question 8

sudden rush of depositors seeking to withdraw funds from the banking system

Answer 8

Bank run

Question 9

fluctuations in aggregate economic activity

Answer 9

Business cycle

Question 10

long-lived goods that are themselves produced and are used to produce other goods and services, but are not used up in the production process

Answer 10

Capital goods

Question 11

group of firms that collude in a given market to restrain competition, often making quota arrangements among themselves

Answer 11

Cartel

Question 12

proposition that if private parties can bargain without cost over the allocation of resources, then they can solve the problem of externalities on their own

Answer 12

Coase Theorem

Question 13

ability to produce a good or service at a lower opportunity cost than other producers

Answer 13

Comparative advantage

Question 14

market with many buyers and sellers trading a homogenous good or service in which each buyer and seller is a price taker

Answer 14

Competitive market

Question 15

two goods for which a rise in the price of one leads to a decline in the demand for the other

Answer 15

Complements

Question 16

index constructed by comparing the cost of purchasing a fixed basket of goods at different times

Answer 16

Consumer Price Index (CPI)

Question 17

difference between the amount that a buyer would be willing to pay for a good or service and the price actually paid

Answer 17

Consumer surplus

Question 18

decrease in private investment that occurs as a result of a reduction in government saving or an increase in government borrowing

Answer 18

Crowding out

Question 19

unemployment caused by deviations of output from its potential level

Answer 19

Cyclical unemployment

Question 20

reduction in total surplus that results from a market distortion such as a tax

Answer 20

Deadweight loss

Question 21

graphical representation of the quantity of a good or service demanded as a function of the price

Answer 21

Demand curve

Question 22

table showing the relationship between the price of a good or service and the quantity demanded

Answer 22

Demand schedule

Question 23

property whereby each each additional increase in inputs results in a smaller increase in the quantity produced

Answer 23

Diminishing returns to scale

Question 24

interest rate that the Federal Reserve charges banks when they must borrow reserves from it

Answer 24

Discount rate

Question 25

difference between the revenue realized by a producer and the opportunity cost of production

Answer 25

Economic Profit

Question 26

percentage change in quantity demanded or supplied as a result of a one percent change in price

Answer 26

Elasticity

Question 27

an individual who takes on the risk of attempting to create new products or services, establish new markets, or develop new methods of production

Answer 27

Entrepreneur

Question 28

situation in which the forces in a system are in balance so that the situation is stable and unchanging

Answer 28

Equilibrium

Question 29

ability to prevent buyers from enjoying the benefits of consuming a good or service without paying for it

Answer 29

Excludability

Question 30

period between a trough and a peak in economic activity

Answer 30

Expansion

Question 31

when the action of one person affects the well-being of someone else but where neither party pays nor is paid for these effects

Answer 31

Externality

Question 32

Founded in Great Britain in 1884, Fabians pursued socialism through gradual political reforms, as opposed to the violent struggles witnessed in Russia, China, Vietnam, Korea, and other nations.

Answer 32

Fabian Society

Question 33

rate that banks charge other banks when they lend reserves

Answer 33

Federal Funds Rate

Question 34

goods or services that are purchased by their ultimate user

Answer 34

Final Goods

Question 35

institutions through which individuals with savings can supply these funds to persons or firms that wish to borrow money to purchase consumption goods or invest in physical capital

Answer 35

Financial markets

Question 36

use of taxes and spending to influence aggregate demand and through it the level of overall economic activity

Answer 36

Fiscal policy

Question 37

cost of production that is independent of the quantity produced

Answer 37

Fixed cost

Question 38

when a company invests in an operational entity in a foreign country that the company or individual will manage directly

Answer 38

Foreign Direct Investment (FDI)

Question 39

unemployment that results because it takes time for workers to search for jobs that are best suited to their tastes and skills

Answer 39

Frictional unemployment

Question 40

benefits that both individuals or nations realize from mutually beneficial exchange

Answer 40

Gains from trade

Question 41

spending on goods and services by federal, state, and local governments

Answer 41

Government purchases

Question 42

market value of final goods and services produced in an economy during a specified period of time

Answer 42

Gross Domestic Product (GDP)

Question 43

skills and experience that are acquired through education, training, and on the job experience that increase a worker's productivity

Answer 43

Human capital

Question 44

case of a market with a small number of sellers, so that sellers have market power

Answer 44

Imperfect competition

Question 45

good for which the quantity demanded falls as buyers' income increases

Answer 45

Inferior good

Question 46

general increase in prices

Answer 46

Inflation

Question 47

any type of service that can be exchanged over the internet or via other methods of communications (call centers, software development and sales, accounting, etc.)

Answer 47

Internet technology services

Question 48

formal and informal rules that structure human interactions

Answer 48

Institutions

Question 49

third party who acts as a link between two others who wish to transact business

Answer 49

Intermediary

Question 50

good or service that is used in the process of producing other goods and services

Answer 50

Intermediate good

Question 51

organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world

Answer 51

International Monetary Fund (IMF)

Question 52

spending on capital equipment, inventories, and structures, including household purchases of new housing

Answer 52

Investment

Question 53

model of short-run aggregate economic fluctuations inspired by the analysis of British economist John Maynard Keynes, which attributes short-run deviations in output from potential to variations in the level of aggregate demand or aggregate supply

Answer 53

Keynesian Model

Question 54

sum of those individuals who are employed and those who are seeking paid work but haven't found it

Answer 54

Labor force

Question 55

fraction of the working-age population who are in the labor force

Answer 55

Labor force participation rate

Question 56

holding other things equal, the quantity demanded is negatively related to the price

Answer 56

Law of Demand

Question 57

holding other things equal, the quantity supplied is positively related to the price

Answer 57

Law of Supply

Question 58

ease with which a nonmonetary asset may be converted into money

Answer 58

Liquidity

Question 59

practice of elected officials trading votes

Answer 59

Logrolling

Question 60

additional cost of production associated with a small increase in the quantity produced

Answer 60

Marginal cost

Question 61

additional revenue resulting from a small increase in the quantity produced

Answer 61

Marginal revenue

Question 62

quantity of currency plus bank reserves

Answer 62

Monetary base

Question 63

use of the supply of money in the economy by the Federal Reserve to influence the level of aggregate demand

Answer 63

Monetary policy

Question 64

asset that is a medium of exchange, unit of account, and store of value

Answer 64

Money

Question 65

ratio of the money supply to the monetary base

Answer 65

Money multiplier

Question 66

quantity of money available to the economy

Answer 66

Money supply

Question 67

market in which there is free entry/exit, but every producer supplies a differentiated product and faces a downward sloping demand curve

Answer 67

Monopolistic competition

Question 68

market in which there is a single producer

Answer 68

Monopoly

Question 69

level of unemployment that would exist if the economy were producing at its potential output

Answer 69

Natural rate of unemployment

Question 70

difference between the purchases of foreign assets by domestic residents and the purchases of domestic assets by foreign residents

Answer 70

Net capital outflow

Question 71

difference between the value of goods and services sold to foreigners and the value of goods and services purchased from foreigners

Answer 71

Net exports

Question 72

proposition that in the long run, changes in the quantity of money affect the price level but do not affect any real quantities

Answer 72

Neutrality of money

Question 73

production of goods and services valued at current prices

Answer 73

Nominal GDP

Question 74

good or service for which demand is positively related to the buyer's income

Answer 74

Normal Good

Question 75

economic analysis used to guide decisions about what should be as opposed to what is the case

Answer 75

Normative economics

Question 76

relationship identified by Arthur Okun between the output gap and the level of cyclical unemployment

Answer 76

Okun's Law

Question 77

market in which there are just a few producers

Answer 77

Oligopoly

Question 78

tool used by Federal Reserve to adjust the money supply by buying or selling US government bonds in the financial market

Answer 78

Open Market Operations

Question 79

cost of any choice is what must be given up by making that choice

Answer 79

Opportunity cost

Question 80

difference between actual output and potential output

Answer 80

Output gap

Question 81

describes an allocation in which the only way to make any individual/group of individuals better off would require making at least one other person worse off

Answer 81

Pareto efficiency

Question 82

literally per head, used to denote an average value for a population

Answer 82

Per capita

Question 83

purchase of shares of stock or bonds

Answer 83

Portfolio investments

Question 84

use of tools of economic analysis to describe and explain economic phenomena and to make prediction about what will happen under particular circumstances

Answer 84

Positive economics

Question 85

quantity of output that would be produce by an economy if all of its resources were being employed at normal rates

Answer 85

Potential output

Question 86

when a business sells the same product to different buyers at different prices

Answer 86

Price discrimination

Question 87

amount by which demand for a given product changes in response to changes in price; specifically, the percentage change in demand that corresponds to a one percent change in the price

Answer 87

Price elasticity of demand

Question 88

difference between the price that producers receive for supplying a good and their marginal cost of producing it

Answer 88

Producer surplus

Question 89

graphical depiction of the combinations of output that can be produced by an economy

Answer 89

Production possibility frontier (PPF)

Question 90

good/service for which it is not possible to establish individual property rights

Answer 90

Public good

Question 91

when individual choices are made by comparing benefits and costs of different actions and then selection the action that produces the greatest benefit

Answer 91

Rationality

Question 92

production of goods/services valued at constant prices

Answer 92

Real GDP

Question 93

period between a peak and a trough in economic activity

Answer 93

Recession

Question 94

using political influence to increase one's economic profits at the expense of others

Answer 94

Rent seeking

Question 95

amount of reserves that the Federal Reserve requires banks to hold

Answer 95

Reserve requirement

Question 96

fraction of deposit liabilities that banks hold to meet depositor withdrawals

Answer 96

Reserves

Question 97

goods/services characterized by the fact that one person's enjoyment of the good/service reduces the quantity available for others' enjoyment

Answer 97

Rival goods

Question 98

different between a person's disposable income and his/her expenditures

Answer 98

Savings

Question 99

inescapable fact of human existence that results from the fact that the available resources are always less then our limitless desires

Answer 99

Scarcity

Question 100

results from the mismatch in skills, locations, or other important characteristics between job seekers and available jobs

Answer 100

Structural unemployment

Question 101

two goods for which an increase in the price of one leads to an increase in the demand for the other

Answer 101

Substitutes

Question 102

graphical representation of the quantity of a good/service supplied as a function of the price

Answer 102

Supply curve

Question 103

table showing relationship between the price of a good/service and the quantity supplied

Answer 103

Supply schedule

Question 104

knowledge about techniques by which inputs are transformed into the goods/services that households desire

Answer 104

Technology

Question 105

total revenue received by a supplier

Answer 105

Total revenue

Question 106

sum of consumer and producer surplus

Answer 106

Total surplus

Question 107

depletion of a common resource due to overuse

Answer 107

Tragedy of the commons

Question 108

state of actively seeking paid work but being unable to find it

Answer 108

Unemployment

Question 109

number of unemployed workers as a fraction of the total labor force

Answer 109

Unemployment rate

Question 110

cost of production that depends on the quantity produced

Answer 110

Variable Cost

Question 111

ratio of nominal GDP to money supply; in effect, the average number of transaction supported by each dollar of the money supply

Answer 111

Velocity of money

Question 112

total value of assets used as a store of value

Answer 112

Wealth