• There are some basic economic terms that
we need to be aware of for our upcoming
Econ test.
Wants
Things we desire to have
Goods
Physical products
Services
Products you can’t touch
Scarcity
The result of an inability to satisfy all of
everyone’s wants
EVERYTHING IS SCARCE
Choices
• We can’t have everything we want
• Therefore, we must choose what we
get
Opportunity Costs
The best alternative given up when
making a decision
Economic Institutions
Established companies or networks of
companies that are involved in the
production, distribution, or purchasing
of goodsand services.
Economics
Studies the choices of people trying to
satisfy their wants in a world of scarcity
Economic Systems
a system of production and exchange of
goods and services as well as allocation
of resources in a society.
Market
Whenever and wherever people
voluntarily make exchanges with one
another
Incentives
a payment or concession to stimulate
greater output or investment
Money
a current medium of exchange in the
form of coins and banknotes; the
assets, property, and resources owned
by someone or something; wealth.
Productive Resources
natural resources, human resources,
and capital resources
Productivity
An economic measure of output per
unit of input. Inputs include labor and
capital, while output is typically
measured in revenues and other GDP
components such as business
inventories.
Economic Interpendence
A characteristic of a society or
macroeconomy with
a high degree of division of labor,
where people depend on other people
to produce most of the goods and
services required to sustain life and
living.
Aggregate Demand
is the total demand for final goods
and services in an economy at a given
time. It specifies the amounts of goods
and services that will be purchased at
all possible price levels.
Aggregate Supply
as the total amount of goods and
services (real output) produced and
supplied by an economy's firms over a
period of time.
Inflation
a persistent, substantial rise in the
general level of prices related to an
increase in the volume of money and
resulting in the loss of value of currency
Elasticity of Demand
The degree to which demand for a good
or service varies with its price.
Entrepreneurs
• a person who organizes and operates a
business or businesses, taking on greater
than normal financial risks in order to do so.
Trade-offs
Giving up some of one thing in order to
get more of another
Decision Making and
Cost-Benefit Analysis
• Whenever people decide whether the
advantages of a particular action are likely
to outweigh its drawbacks
Global Economy
Economic actions taken anywhere in the
world may affect an individual’s
standard of living
Microeconomics
Studies the individual or a single
business in the economy
Macroeconomics
Studies the economy as a whole
Factors of Production
• Natural resources
• Human resources
• Capital
• Entrepeneurship
Economic Questions
• What goods will be produced?
• How will the goods be produced?
• For whom will the goods be produced?
Human Capital
• the collective skills, knowledge, or other
intangible assets of individuals that can be
used to create economic value for the
individuals, their employers, or their
community:
Foreign Currency
refers to the global market
where currencies are traded virtually
around-the-clock
Compound Interest
Interest that is added not only to the
principal of a loan or savings account
but also to the interest already added
to the loan or account; interest paid
on interest.
Credit
A contractual agreement in which a
borrower receives something of value
now and agrees to repay the lender at
some date in the future, generally with
interest. The term also refers to the
borrowing capacity of an individual or
company
Savings and Investing
• the amount left over when the cost of a
person's consumer expenditure is
subtracted from the amount of
disposable income that he or she earns
in a given period of time.