BAM: Chapter 3 Vocabulary Flashcards

Study Notes

Economy: Emphasizes resource efficiency in production and consumption processes.
Resources: Essential materials sourced from Earth that hold value and utility for human needs.
Factors of Production: Comprises land, labor, and capital, forming the foundational groups of resources for producing goods and services.

Traditional Economy: Relies on customs and rituals to make decisions regarding production and consumption, often seen in agrarian societies.
Market Economy: Characterized by voluntary exchange where market forces determine production and consumption choices.
Command Economy: Government regulation dictates economic activities and resource allocation.

Gross Domestic Product (GDP): Represents total dollar value of final goods and services produced within a nation's borders in one year.
Gross National Product (GNP): Measures total value of goods and services including overseas income generated by a nation's residents over a year.
Consumer Price Index (CPI): Tracks average price changes of consumer goods and services over time, indicative of inflation.
Producer Price Index (PPI): Assesses wholesale price changes, providing insights into manufacturing cost dynamics.

Business Cycle: Describes the cyclical trend of economic activities, including phases of recession, recovery, and growth.
Expansion: A phase marked by an increase in economic activities, size, and scope.
Recession: Identified by a decline in economic performance and activity.
Depression: A prolonged period of economic downturn characterized by high unemployment, low prices, and diminished trade and investment.
Recovery: Refers to the phase of returning to previous economic performance after a downturn.

Productivity: Indicates how effectively resources are utilized for producing goods and services; higher productivity suggests more efficient resource use.
Scarcity: Refers to inadequate supply relative to demand, highlighting the necessity for efficient resource management.
Inflation: Describes a continuous rise in general price levels, impacting purchasing power and economic stability.