Basic Economic Terms
This term describes the limited nature of society's resources
Scarcity
This is the term for money received, especially on a regular basis, for work or through investments.
Income
He is known as the father of modern economics and wrote The Wealth of Nations.
Adam Smith
When the price of a good goes up, the quantity demanded usually does this.
Go down
An economic system where decisions are made by individuals and businesses with little government involvement.
Market economy
The study of how individuals and societies use limited resources to satisfy unlimited wants.
Economics
A place where goods and services are bought and sold.
Market
This British economist developed the idea of Keynesian economics, focusing on government intervention in the economy.
John Maynard Keynes
This is what happens when the demand for a product exceeds the supply.
Shortage
An economic system where the government makes all decisions about production and distribution.
Command economy
The cost of the next best alternative that is given up when making a choice.
Opportunity cost
When prices of goods rise over time, this is what occurs.
Inflation
He introduced the concept of comparative advantage in trade theory.
David Ricardo
When supply increases and demand stays the same, what happens to prices?
Decrease
The United States is an example of this type of economy, which combines elements of both market and command economies.
Mixed economy
The amount of a good or service that producers are willing to sell at a given price.
Supply
The amount left over when a business's income exceeds its expenses.
Profit
Known for his work on capitalism and communism, he co-authored The Communist Manifesto.
Karl Marx
The point where the quantity supplied equals the quantity demanded is called this.
Equilibrium
In this type of economy, customs and traditions determine what goods and services are produced.
Traditional economy
This term refers to a situation where there is more demand for a product than there is supply.
A type of good that you buy less of when your income increases (e.g., instant noodles).
Inferior good
This economist won the Nobel Prize for his work on game theory.
John Nash
This law states that, all else being equal, as the price of a product increases, the quantity supplied also increases.
Law of supply
The total value of all goods and services produced within a country is called this.
Gross Domestic Product (GDP)