Terms
The total value of all goods and services a country produces within its borders. It shows how much economic activity is happening in the country.
GDP (Gross Domestic Product)
Results from rising production costs, such as higher wages or raw material prices.
Cost-Push Inflation
The government controls everything. (Ideas of socialism)
Command Economy
Regulates monetary policy and the banking system. Aims to ensure economic stability and low inflation.
Federal Reserve
Rules that guide businesses to keep things safe, fair, and sustainable, protecting the public and the environment while promoting economic stability.
government regulations
Private individuals and businesses own and run land, labor, and capital to make a profit, with little government interference (laissez-faire policies).
Capitalism
Occurs when demand for goods and services exceeds supply.
Demand-Pull Inflation
Decisions are made by individuals and businesses, based on supply and demand. The government doesn't interfere much. (ideas of capitalism)
Market Economy
Provides nonpartisan analysis of the federal budget and economic projections. Evaluates the impact of proposed legislation on the economy.
Congressional Budget Office (CBO)
This type of unemployment happens when the economy slows down, like during a recession.
Cyclical Unemployment
This happens when people are temporarily between jobs.
Frictional Unemployment
Changes interest rates/buying or selling government bonds to manage the money supply.
Changes interest rates/buying or selling government bonds to manage the money supply. Lower interest rates make it cheaper to borrow and spend money. Higher rates slow down spending to keep prices from rising too fast
Monetary Policy
Efficiency: Mixes competition with government rules to solve economic problems.
Equity: Promotes fairness by redistributing wealth through taxes and programs.
Individual Liberty: Balances personal freedom with government-provided services and rules.
Mixed Economy
Manages federal finances, including issuing bonds and overseeing public debt. Advises the President on fiscal policies.
Department of the Treasury
Efficiency: Businesses work well because competition pushes them to improve.
Equity: This can be unfair, with big gaps between rich and poor.
Individual Liberty: Gives people the freedom to own property and run businesses how they want.
Capitalism
The government or groups own and manage major industries and resources, aiming for fair wealth distribution.
Socialism
the system a society uses to make, share, and use goods and services. It's how people get the things they need and want.
Economy
An economy with a Combo of private enterprise and government regulation.
Mixed Economy
The government changes spending and taxes to affect the economy.
To boost the economy during a recession, it might spend more (like on public projects) or lower taxes. To fight inflation, it might spend less or raise taxes.
Fiscal Policy
refers to the natural rise and fall of economic growth over time, consisting of distinct phases
Business cycle
Happens when workers' skills don't fit the jobs available. Example: New technology replaces jobs, so workers need new skills.
Structural Unemployment
Efficiency: Might not be very efficient because the government controls production, with less competition.
Equity: Aims for fairness by sharing wealth and meeting basic needs for everyone.
Individual Liberty: Reduces personal freedom in the economy since the government controls many decisions.
Socialism
the method used by a society to produce and distribute goods and services
Economic System
Based on old customs, like farming or making things by hand. Small communities
Traditional Economy
High GDP growth means the economy is________
Growing