Microeconomics & Markets
This fundamental economic law states that as the price of a good increases, the quantity demanded by consumers decreases.
What is the Law of Demand?
The fundamental economic problem that stems from having unlimited human wants in a world of limited resources.
What is Scarcity?
The total dollar value of all final goods and services produced within a country's borders in a given year.
What is Gross Domestic Product (GDP)?
The central bank of the United States, responsible for managing monetary policy.
What is the Federal Reserve (or "The Fed")?
A tax imposed by a government on imported goods and services.
What is a Tariff?
The point on a supply and demand graph where the supply curve and demand curve intersect.
What is Equilibrium (or Equilibrium Price)?
The value of the next best alternative given up when making a choice.
What is Opportunity Cost?
A sustained, general increase in the price level of goods and services over time.
What is Inflation?
Government policy that uses taxation and spending to influence the nation's economy.
What is Fiscal Policy?
The ability of a country to produce a good at a lower opportunity cost than another country.
What is Comparative Advantage?
A market structure dominated by a single seller who controls the entire supply of a product or service.
What is a Monopoly?
Land, Labor, Capital, and Entrepreneurship collectively make up these primary inputs used in production.
What are the Factors of Production?
The periodic expansion and contraction of economic activity, typically measured through phases like peak, contraction, trough, and expansion.
What is the Business Cycle?
The interest rate that the Federal Reserve charges commercial banks to borrow money overnight.
What is the Discount Rate?
Interest calculated on both the initial principal and the accumulated interest from previous periods.
What is Compound Interest?
This measure reflects how responsive consumers or producers are to a change in price.
What is Elasticity (Price Elasticity)?
Adam Smith’s famous metaphor describing how individual self-interest in a free market inadvertently promotes broader economic well-being.
What is the "Invisible Hand"?
This specific type of unemployment occurs when workers are temporarily between jobs or searching for their first job.
What is Frictional Unemployment?
The central bank policy tool of buying and selling government securities on the open market to control the money supply.
What are Open Market Operations?
A limit placed on the physical quantity of a specific good that can be imported into a country.
What is an Import Quota?
A situation where the free market fails to allocate resources efficiently, often resulting in negative externalities like pollution.
What is Market Failure?
The economic principle stating that as you consume more units of a good, the additional satisfaction gained from each extra unit declines.
What is the Law of Diminishing Marginal Utility?
A period of economic stagnation combined with high inflation and high unemployment.
What is Stagflation?
The economic theory championed by John Maynard Keynes advocating for increased government spending during recessions to stimulate demand.
What is Keynesian Economics?
The financial record of all transactions between a country's residents and the rest of the world over a specific period.
What is the Balance of Payments?