Down to Basics
The study of the performance, structure, behavior, and decision-making of an economy as a whole.
Macroeconomics
A tax imposed on imported goods
Tariff
The amount of a good or service that producers are willing and able to offer for sale at each possible price during a given time period.
Supply
What is the primary purpose of a tariff?
To protect domestic indurtries
The name of Adams Smith's economic theory
The invisible hand
The cost of borrowing money, often influenced by the Federal Reserve's policies
Interest Rates
The study of the behavior of individual households, firms, and markets.
Microeconomics
When a single company dominates a market.
Monopoly
The quantity of a good or service that buyers are willing and able to purchase at various prices during a given time period
Demand
Expenditures on public services and programs
Government Spending
The condition that results from society not having enough resources to produce all the things people would like to have.
Scarcity
The interest rate that banks charge each other for overnight loans, a key tool used by the Federal Reserve in implementing monetary policy
Federal Funds Rate
The highest-valued alternative that must be given up when a choice is made
Opportunity Cost
When one party in a transaction has more or better information than the other potentially leading to unfair advantages or market inefficiencies.
Information Asymmetry
Can be caused by new technology making production cheaper
Shift in Supply
Can be adjusted to influence consumer spending
Taxation
A type of inflation that occurs when the demand for goods and services outpaces the economy's ability to produce them
Demand-Pull Inflation
An action the FED can take in changing the amount banks must keep in reserve
Reserve Requirements
Key indicator of a country's economic health, often abbreviated
GDP (Gross Domestic Product)
Unexpected effects that occur as a result of government intervention or other economic actions
Unintended consequences
Shows how quantity supplied changes with price
Supply Curve
To prevent monopolies and promote competition in markets, ensuring that consumers benefit from choice and competitive pricing
Anti-Trust Laws
What does the “Rule of 72” help estimate
How long it takes an economy to double in size
Why is the Federal Reserve designed to operate independently from the government
To ensure monetary policy decisions are based on economic, not political, considerations
An economic system that combines elements of both market and command economies
Mixed Economy
A state of the economy in which there is low volatility in key measures such as price levels and employment
Economic Stability
Can be caused by changes in consumer preferences
Shift in Demand
Three ways governments can intervene in markets to address pricing issues
Regulations, Taxes/Subsidies and Anti-trust Laws
Inflation that happens when the costs of production increase, such as higher wages or raw material prices
Cost-Push Inflation
Buying or selling government securities
Open Market Operations
A tool used to measure inflation by tracking the cost of a representative sample of goods and services typically purchased by households.
Consumer Price Index (CPI)
Costs or benefits not reflected in the market price Asymmetry
Externalities
The price at which quantity supplied equals quantity demanded in a market.
Market Price
Goods or services that benefit everyone, regardless of who pays for them
Public Goods
If a country’s money supply grows faster than its economic output, each unit of currency becomes less valuable
Monetary Inflation
An institution, like the Federal Reserve, that manages a state's currency, money supply, and interest rates
Central Bank
An economic system where prices and individual choices determine how resources are allocated
Market Economy
Costs that are hidden or indirect and often non-monetary
Implicit Costs
Shows how quantity demanded changes with price
Demand Curve
The use of government spending and taxation to influence the economy
Fiscal Policy
What economic principle explains why two parties benefit from trade, even if one is more efficient in producing everything
Comparative advantage
The network of institutions and markets that facilitate the flow of money in an economy, which the Federal Reserve aims to keep stable
Financial System
An economic system where a central authority makes decisions about resource allocation
Command Economy
Direct monetary expenses
Explicit Costs
Where quantity supplied equals quantity demanded
Equilibrium Point
Controlling the supply of money and interest rates to affect economic activity
Monetary Policy
Three key factors that contribute to economic growth.
Technological Advancements, Human Capital Development & Innovation and Entrepreneurship
A monetary policy in which a central bank purchases securities to increase the money supply and encourage lending and investment
Quantitative Easing