Glossary of Economics terms
A
1. Aggregate Demand: Total demand for goods and services in an economy.
2. Aggregate Supply: Total supply of goods and services in an economy.
3. Arbitrage: Buying and selling of goods or services to profit from price differences.
4. Asset: Anything of value owned by an individual or business.
B
1. Balance of Payments: Record of a country's transactions with other countries.
2. Budget: Financial plan outlining projected income and expenses.
3. Budget Deficit: Excess of government spending over revenue.
C
1. Capital: Goods used to produce other goods and services.
2. Consumer Price Index (CPI): Measure of the average change in prices of a basket of goods and services.
3. Comparative Advantage: Ability of a country to produce a good or service at a lower opportunity cost.
4. Cost-Benefit Analysis: Evaluation of the costs and benefits of a project or decision.
D
1. Demand: Quantity of a good or service that consumers are willing and able to buy.
2. Depreciation: Decrease in value of an asset over time.
3. Discount Rate: Interest rate used to calculate the present value of future cash flows.
E
1. Economic Growth: Increase in the production of goods and services in an economy.
2. Economic System: Way in which a society organizes its economic activities.
3. Elasticity: Measure of how responsive quantity demanded or supplied is to changes in price or other variables.
4. Entrepreneur: Individual who starts and runs a business.
F
1. Fiscal Policy: Use of government spending and taxation to influence the overall level of economic activity.
2. Foreign Exchange: Exchange of one country's currency for another.
G
1. GDP (Gross Domestic Product): Total value of goods and services produced within a country.
2. GNP (Gross National Product): Total value of goods and services produced by a country's citizens.
3. Goods: Tangible items that can be bought or sold.
H
1. Human Capital: Skills, education, and experience of workers.
2. Hyperinflation: Extremely high and rapid inflation.
I
1. Incentive: Reward or motivation to encourage a particular behavior.
2. Income: Money earned from working or investing.
3. Inflation: Rise in the general price level of goods and services.
4. Interest Rate: Cost of borrowing money.
J
1. Joint Venture: Partnership between two or more businesses.
K
1. Keynesian Economics: Economic theory that emphasizes government intervention in the economy.
L
1. Labor: Human effort used to produce goods and services.
2. Law of Diminishing Returns: Decrease in marginal output as more inputs are added.
3. Law of Supply: Relationship between the price of a good and the quantity supplied.
M
1. Macro Economics: Study of the economy as a whole.
2. Marginal Analysis: Study of the additional benefits and costs of a decision.
3. Market: Place where buyers and sellers meet to exchange goods and services.
4. Market Failure: Situation where the market does not allocate resources efficiently.
N
1. National Income: Total income earned by a country's citizens.
2. Natural Monopoly: Situation where a single firm can supply the entire market demand.
3. Normative Economics: Study of what the economy should be like.
O
1. Opportunity Cost: Value of the next best alternative given up.
2. Output: Quantity of goods and services produced.
P
1. Perfect Competition: Market structure where many firms produce a homogeneous product.
2. Price Ceiling: Maximum price that can be charged for a good or service.
3. Price Floor: Minimum price that can be charged for a good or service.
4. Production: Process of creating goods and services.
5. Profit: Excess of revenue over costs.
Q
1. Quantity Demanded: Amount of a good or service that consumers are willing and able to buy.
R
1. Rate of Return: Return on investment expressed as a percentage.
2. Rationing: Limiting the quantity of a good or service available.
3. Recession: Period of economic decline.
S
1. Scarcity: Limited availability of resources.
2. Services: Intangible items that can be bought or sold.
3. Shortage: Situation where the quantity demanded exceeds the quantity supplied.
4. Supply: Quantity of a good or service that producers are willing and able to produce.
T
1. Tariff: Tax on imported goods.
