Foundations
This occurs because human wants are unlimited but resources are limited.
Scarcity
This law states that as price increases, quantity demanded decreases.
What is the law of demand?
The total value of final goods and services produced within a country in one year.
GDP
This type of tax takes a larger percentage of income from higher earners.
What is a progressive tax?
When the U.S. dollar loses value compared to other currencies, it is experiencing this.
What is currency depreciation?
The four resources used to produce goods and services in an economy.
Land, Labor, Capital, Entrepreneurship
Income, tastes, and number of buyers are examples of these.
What are demand shifters?
In the GDP formula C + I + G + (X − M), this letter represents household spending.
What is Consumption?
A tax that takes a larger percentage of income from lower-income earners.
What is a regressive tax?
A benefit of free trade agreements is that countries can specialize and achieve this economic outcome.
What is lower production costs / greater efficiency?
When one country can produce more of a good using than another country, it has this advantage.
Absolute Advantage
The point where supply and demand intersect in a market.
What is equilibrium?
Unemployment caused by workers changing jobs or entering the workforce.
What is frictional unemployment?
Membership restrictions are a common limitation of this financial institution.
What is a credit union?
Spending on programs like Social Security, Medicare, and Medicaid is classified as this type of government spending.
What is mandatory spending?
A point inside the Production Possibilities Curve represents this type of production.
What is inefficiency?
A government price control set below equilibrium that often causes shortages.
What is a price ceiling?
A general increase in prices across the economy over time.
What is inflation?
This type of auto insurance covers damage to your car after an accident.
What is collision insurance?
A tax that charges the same percentage of income regardless of income level is called this.
What is a proportional (flat) tax?
The market where households buy goods and services from firms in the circular flow model.
What is the product market?
A market structure where many firms sell similar but slightly different products like clothing brands.
What is monopolistic competition?
A period of declining economic activity marked by falling GDP and rising unemployment.
What is a recession?
The record showing how reliably someone repays borrowed money is called this.
What is a credit history?
The organization responsible for controlling the money supply in the United States.
What is the Federal Reserve?