Economics Chapter 1 Key Terms

Study Notes

Economic Concepts

Business cycle: Alternating periods of economic growth and recession affecting national economic activity.
Business: Organized efforts to produce and sell goods/services for profit, fulfilling societal needs.
Capitalism: Economic system characterized by private ownership and operation of businesses.
Command economy: Government determines the production, processes, distribution, and ownership of goods and services.

Market Systems and Economics

Competition: Rivalry among firms to attract customers and increase sales.
Consumer Price Index (CPI): Monthly measure tracking price changes of a standard basket of goods for urban consumers.
E-business: Commercial transactions conducted online, leveraging internet facilities for profit.

Economic Conditions

Deflation: Reduction in overall price levels in an economy.
Depression: Extended period of severe recession, marked by significant declines in economic activity.
Inflation: General increase in prices across the economy.

Economic Metrics

Gross Domestic Product (GDP): Total monetary value of all goods and services produced within a country's borders in a specific time frame.
Producer Price Index (PPI): Monthly index assessing prices that producers receive for their final goods.

Business Structures and Practices

Domestic system: Manufacturing approach where raw materials are provided to households for processing into finished goods.
Factory system: Centralized production system gathering materials, machinery, and labor in one location.

Economic Policies

Fiscal policy: Governmental adjustments in taxation and spending influencing savings and expenditure levels.
Monetary policies: Federal Reserve strategies aimed at stabilizing the economy, affecting employment and interest rates.

Market Dynamics

Market economy: System driven by individual decisions regarding production and consumption, shaped by market forces.
Market price: Equilibrium price where the quantity of goods demanded matches the quantity supplied.
Product differentiation: Strategy of distinguishing a company's products from competitors to gain market share.

Types of Competition

Monopoly: Market situation with a single seller controlling supply, limiting consumer choice.
Oligopoly: Market characterized by a few dominant sellers influencing prices.
Monopolistic competition: Market structure with many sellers offering differentiated products.

Economic Contributions

Productivity: Measured output per worker per hour, indicating efficiency levels.
Profit: Revenue remaining after expenses are deducted, essential for business sustainability.

Employment and Economic Structure

Service economy: Economic framework focusing more on services offered rather than goods produced.
Cultural diversity: Emphasizes respect for differences in demographics such as age, gender, ethnicity, and ability.

Economic Challenges

Recession: Characterized by two consecutive quarters of declining GDP, indicating economic slowdown.
Federal deficit: Occurs when government expenditures exceed revenues within a fiscal year.
National debt: Cumulative total of federal deficits, reflecting the government's borrowing history.

Description

Test your understanding of key economic concepts from Chapter 1. This quiz covers fundamental terms such as business cycles, capitalism, and types of economies. Prepare to explore the vocabulary that defines economic principles and systems.