Section 1: Economic Concepts

Section 1: Economic Concepts 1. In your own words, define the economic terms below. command economy: An economic system in which the government controls the prices, production, investment, and incomes. economics: The study of wealth usage, and consumption Exports: Goods and services made in one country being taken to another country. fiscal policy: The government usings its money to influence the economy globalization: Goods/service being sold and transported all over the world. gross domestic product (GDP): The total value of goods and services produced in a country. imports: Bringing goods and services in from abroad labor market: The supply and demand for labor. Employers provide the demand and employers do the labor Macro economics: Marco economics is the focus of inflation, interest, economic output, foreign exchange. Basically the more statistical part of economics. market: The regular gathering of people to sell and purchase goods. market economy: Market economy is the system of where two forces, Demand and Supply determine the production of goods. Monetary: Relating to money policy: A set of rules to guide the decision making of a country to achieve a reasonable outcome Scarcity: The lack of resources Specialization: An area where someone excels in. allocative efficiency: Allocative efficiency is a efficient market meet the needs and wants of society comparative advantage: Comparative advantage is an economy's ability to produce goods at a lower opportunity cost than its competitors invisible hand: Invisible hand is a metaphor that some invisible force is moving the market economy law of diminishing marginal utility: The law of diminishing marginal utility states that for any good or service that, the marginal utility of that good or service decreases as the quantity of the good increases opportunity cost: The potential profit from a untaken opportunity production possibilities frontier (PPF) The curve on a graph that shows the possible that can be produced from 2 products if they both depend on each other productive efficiency: producing the largest amount of product based on the amount of resources available sunk costs: Money that have been spent and cant be recovered