GLOSSARY OF ECONOMICS

Chapter1. Economics (the last definition) Goods Services Natural resources Human resources Capital resources A scarce resource Opportunity cost Chapter 2: Macroecomonics Microeconomics economic gro th GN! inflation "nemployment rate Mar$et ('ehaviorally defined) #ransfer payment Chapter 5: *emand &a of demand Hourly age

(age income Mar$et (organi)ationally defined)

E+cess demand Supply &a of supply

E+cess supply Mar$et price Chapter 6: %ndividual,Sole proprietorship !artnership Corporation "nlimited lia'ility vs limited lia'ility Stoc$holder Charter Chapter 7: -elative price A'solute price Compliment Su'stitute

Chapter 3: #raditional economic system Mar$et economic system Command economic system Output %nput Capital &a'our Entrepreneurship O nership Chapter 4: !rice #uition

 Normal goods %nferior goods

Revision questions on economics ./ (hat are economic resources0 (hy do people have to ma$e economic choices0 1/ (hat are three economic systems0 #heir functions0 2/ (hat are three 'asic economic 3uestions0 4/ (hat are the government5s roles in the mar$et economy0 6/ (hat is price0 (hat are its roles in the mar$et0 7/ (hat is demand0 8uantity demanded0 &a 9/ (hat is supply0 8uantity supplied0 &a :/ (hat is the mar$et price0 Ho ;/ (hat affect the curve0 change in of demand0 of supply0

is it created0 the supply curve and demand

.</ (hat are three $inds of 'usiness organi)ations0 (hat are their advantages and disadvantages0 Topics for economic revision ./ (hat are the t o sides of the mar$et0 Ho is supply distinguished from demand0 Ho is the mar$et e3uili'rium price formed0 (hat causes prices to go up and go do n0 (hat is the role played 'y prices in a mar$et economy in general (i/e/ %n influencing decision ma$ing on the three 'asic economic issues of hat= ho and for hom to produce) 1/ (rite an essay a'out the roles of the government in the mar$et economy0 2/ (rite an essay a'out advantages of corporations over other t o $inds of 'usiness organi)ations0 4/ !eople say that >studying economics is studying the ay to get rich>/ *o you agree ith this statement0 (hy, hy not0 6/ Ho do prices in the mar$et determine the ans er of 'asic economic 3uestions0 7/ (hy are mar$et prices fluctuating 'ut not fi+ed in a mar$et economy0 (hat ma$es prices change0

9/ (rite an essay e+plaining hat economics is a'out and hy people= 'usinesses and governments have to ma$e economic choices/ :/ (rite an essay a'out three economic systems and their characteristics/ ;/ (hat is the difference 'et een classical economics and ?eynesian economics0

GLOSSARY OF ECONOMICS
Chapter 1 Economics: (the last definition) the study of how society uses its scarce resources to produce goods and services Goods: Goods are tangible and visible man-made or natural products being on sale in the market Services: are intangible and invisible things which result from useful work done by people for people in the market Natural resources: all things from the natural world that serve as raw material input for production of goods and services Human resources: consist of all active population of a country. In other words, they are at the working age except disabled and handicapped people Capital resources are both producible and reproducible things which are used to produce goods and services Entrepreneur: refers to the skills of people who are willing to invest their time and money to run a business Economic/business cycle: is the periodic change or ups and downs in the level of a nation!s economic activity Peak: real G"# reaches its maximum. Recession: a downturn - real G"# declines ottom/ !rou"h: real G"# reaches its minimum Recovery: an upturn - real G"# rises # scarce resource: one for which the demand at a $ero price would excess the available supply Scarcity: means that society has limited resources and therefore cannot produce all the goods and services people wish to have $pportunity cost of an item is what you give up to obtain that item !rade o%%: %o get one thing, we usually have to give up another thing Chapter &: Economic system: %he way that a group, community or nation organi$es itself for production 'acroecomonics: %he branch of economics that considers the relationships among broad economic aggregates such as national income, total volumes of saving, investment, consumption expenditure, employment, and money supply. It is also concerned with determinants of the magnitudes of these aggregates and their rates of change over time 'icroeconomics: %he branch of economics concerned with individual decision units--firms and households--and the way in which their decisions interact to determine relative prices of goods and factors of production and how much of these will be bought and sold. %he market is the central concept in microeconomics Economic "ro(th: an increase in the nation&s capacity to produce goods and services GNP: G"# ' net income from within and outside of a country by the country&s businesses for final use during a year G)P: %otal market value of all goods and services produced within a countries borders for final use during a year Personal income is the total income received in one year by all families and individuals in the country *n%lation is the increase in general price level in a year compared with it in the previous year. +nemployment rate: is the percentage of the active population that is unemployed Stock market #vera"e is used to express stock market prices in the stock exchange Chapter ,: Private property: %he right of individuals to exercise control over things owned

!raditional economic system is the economic system in which all economic activities are inherited from generation to generation. 'arket economic system: is an economic system in which the production, pricing, and distribution of goods and services are determined by the government rather than market forces. Command economic system: is an economic system in which all economic decisions are done by the government $utput: is goods and services produced by a society *nput: is the productive resources an economy uses to produce goods and services (apital all )man-made inputs* used in the production process (tools, machinery, and physical plants). -abour anyone who works +)paid work*,. -abor is the )brain-power* and )musclepower* of human beings Entrepreneurship: refers to the innovating, organi$ing and risk-taking activities of individuals and firms that create new products and new markets $(nership: Is the right given to individuals and firms by law to possess, employ, rent and transfer means of production as they wish Capitalism is a political and economic philosophy characteri$ed by marketplace competition and private ownership of business

government controls the factors of production. %here is no financial incentive for people to increase their productivity because the government regulates and assigns .ocialist countries have an increased amount of government involvement in the economy, but the market is not completely controlled. %he state will generally control noncompetitive companies in areas 'i.ed market economy economic systems that are a mixture of both capitalist and socialist economies. /ost developing countries have mixed systems. %heir essential feature is the coexistence of substantial private and public activity within a single economy Chapter /: Price: is a unit of money or another kind of goods paid for a unit of product !uition the money that you pay to be taught, especially in a college or university Hourly (a"e a regular amount of money that you earn every hour for work or services 0a"e income: the price for an hour of labour Salary is the price for a month or a year!s worth of labour. Rent is the price for the use of a house for a month 'arket (organi$ationally defined) the entire enterprise of buying and selling goods and services at a particular location or geographically dispersed locations. /arket (behaviorally defined) a selfcoordinating mechanism which ad0usts the behaviors of sellers and buyers on the basis of prices !rans%er payment: payments made to individuals without re1uiring provision of any service in return

Communism is a social, political, and economic philosophy in which the

Chapter /: )emand: amount of goods and services that consumers are willing and able to purchase at conceivable prices or in a range of prices 2 demand schedule shows how much of a good or service consumers will want to buy at different prices -a( o% demand: .tates that when the price of a good rises and everything else remains the same, the 1uantity of the good demanded will fall E.cess demand: the situation in which the 1uantity demanded at a given price exceeds the 1uantity supplied. Supply: %he amount of goods and services which are offered for sale at conceivable prices or in a range of prices. # supply schedule shows how much of a good or service would be supplied at different prices -a( o% supply: .tates that when the price of a good rises and everything else remains the same, the 1uantity of the good supplied will rise E.cess supply: 1uantity supplied 3 1uantity demanded 'arket price: /arket price is the one at which the 1uantity demanded is e1ual to the 1uantity supplied E1uilibrium refers to a situation in which the price has reached the level where 1uantity supplied e1uals 1uantity demanded E1uilibrium Price: %he price that balances 1uantity supplied and 1uantity demanded. 4n a graph, it is the price at which the supply and demand curves intersect. E1uilibrium 2uantity: %he 1uantity supplied and the 1uantity demanded at the e1uilibrium price. 4n a graph it is the 1uantity at which the supply and demand curves intersect. Chapter 3:

*ndividual/Sole proprietorship: is a business organi$ation in which there is only one owner Partnership: Is a business organi$ation in which there are two or more owners. %hey agree with each other to contribute capital, duties and responsibilities to run the business. Corporation is a business organi$ation which is licensed by the government +nlimited liability: %he only one owner of the company has to be personally liable for all debts of the company -imited liability: If your company loses money, the stockholders lose only what they invested Stockholder: are the owners of the corporation. 5esidual claims to profits and assets. 5ights to vote to 6lect the board of directors, 2dopt the financial statements, 2pprove the auditors for the coming year Charter: Is the license granted to the corporation by the government. Chapter 4: Relative price: is the money price of a goods divided by the money price of another goods or by the average price of other goods #bsolute price is the price of a goods in money terms Compliment: %wo goods are complements if an increase in the price of one causes a fall in demand for the other.

Substitute: %wo goods are substitutes if an increase in the price of one causes an increase in demand for the other Normal "oods: "emand for a normal good is positively related to income *n%erior "oods: "emand for an inferior good negatively related to income

Price elasticity o% demand: %he responsiveness of the 1uantity of a commodity demanded to a change in its price, expressed as the percentage change in 1uantity demanded divided by the percentage change in price.