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Economic Terms

Enhance your knowledge of key economic terms for your upcoming Econ test, including scarcity, choices, opportunity costs, incentives, and more. Prepare effectively for economic studies.

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Economic Terms

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  1. Economic Terms

  2. There are some basic economic terms that we need to be aware of for our upcoming Econ test.

  3. Wants Things we desire to have

  4. Goods Physical products

  5. Services Products you can’t touch

  6. Scarcity The result of an inability to satisfy all of everyone’s wants EVERYTHING IS SCARCE

  7. Choices • We can’t have everything we want • Therefore, we must choose what we get

  8. Opportunity Costs The best alternative given up when making a decision

  9. Economic Institutions Established companies or networks of companies that are involved in the production, distribution, or purchasing of goodsand services.

  10. Economics Studies the choices of people trying to satisfy their wants in a world of scarcity

  11. Economic Systems a system of production and exchange of goods and services as well as allocation of resources in a society.

  12. Market Whenever and wherever people voluntarily make exchanges with one another

  13. Incentives a payment or concession to stimulate greater output or investment

  14. Money a current medium of exchange in the form of coins and banknotes; the assets, property, and resources owned by someone or something; wealth.

  15. Productive Resources natural resources, human resources, and capital resources

  16. 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.

  17. Economic Interpendence A characteristic of a society or macroeconomy with a highdegree of division of labor, where people depend on other people to produce most of the goods and servicesrequired to sustain life and living.

  18. 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.

  19. 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.

  20. 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

  21. Elasticity of Demand The degree to which demand for a good or service varies with its price.

  22. Entrepreneurs • a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

  23. Trade-offs Giving up some of one thing in order to get more of another

  24. Decision Making and Cost-Benefit Analysis • Whenever people decide whether the advantages of a particular action are likely to outweigh its drawbacks

  25. Global Economy Economic actions taken anywhere in the world may affect an individual’s standard of living

  26. Microeconomics Studies the individual or a single business in the economy

  27. Macroeconomics Studies the economy as a whole

  28. Factors of Production • Natural resources • Human resources • Capital • Entrepeneurship

  29. Economic Questions • What goods will be produced? • How will the goods be produced? • For whom will the goods be produced?

  30. 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: 

  31. Foreign Currency refers to the global market where currencies are traded virtually around-the-clock

  32. 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.

  33. 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

  34. 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.

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