WGU D089 Principles of Economics

D089 Principles of Economics 5.0 (3 reviews) Students also studied Terms in this set (250) Western Governors UniversityD 089 Save WGU - D089 Principles of Economic...263 terms Marcel_GilesPreview D089 - Module 1 Teacher 37 terms WGU_Econ_CI_Team Preview The Economic Problem Teacher 21 terms WGU_Econ_CI_Team Preview Princip 32 terms wtf Absolute AdvantageThe capability to produce more of a given product using less of a given resource than a competing entity Absolute QuotaStrictly limiting the quantity of goods that may enter a country Accounting ProfitTotal revenues minus explicit costs, including depreciation AcquisitionWhen one firm purchases another Ad Valorem TariffsImport tax based on a fixed percentage of the assessed commercial value of imported goods Adverse SelectionA process in which markets deteriorate when buyers and sellers have access to different or imperfect information; also known as asymmetric information Aggregate DemandAn economic measurement of the total amount of demand for all finished goods and services produced in an economy Aggregate Demand CurveShows the total spending on domestic goods and services at each price level AD-AS ModelA model that shows what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level

Aggregate SupplyThe total supply of goods and services available to a particular market from producers Aggregate Supply CurvesThe total quantity of output (real GDP) that firms will produce and sell at each price level Allocative EfficiencyProducing goods and services demanded by consumers at a price that reflect the marginal cost AssetSomething or someone of any value; any portion of one's property or effects so considered AutarkyNational economic self-sufficiency Automatic StabilizersA type of fiscal policy designed to offset fluctuations in the nation's economy through normal operations such as, unemployment benefits Balanced BudgetWhen the government spends exactly the same amount as it receives in a given year Bank RunsWhen a large number of customers of a bank or other financial institution withdraw their deposits simultaneously over concerns of the bank's solvency Barriers to EntryThe legal, technological, or market forces that may discourage or prevent potential competitors from entering a market BarterTrading one good or service for another without using money Base YearStarting point from which changes in prices are measured Basket of Goods and ServicesA fixed set of consumer products and services valued on an annual basis Broadly DefinedMarkets that tend to be fairly inelastic and have no good substitutes Budget ConstraintRepresents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income Budget DeficitWhen the federal government spends more money than it receives in taxes in a given year Budget SurplusWhen the government receives more money in taxes than it spends in a year Business CycleThe economy's relatively short-term movement in and out of recession Business CyclesA series of growing and shrinking periods of economic activity measured by increases and decreases in GDP Capital GoodsGoods that are used in producing other goods rather than being bought by consumers

CartelsA group of firms that collude to produce the monopoly output and sell at the monopoly price Central BanksThe principal monetary authority of a country or monetary union; it normally regulates the supply of money, issues currency, and controls interest rates Circular Flow ModelAn economic model that shows the flow of money and goods through the economy. The most common form of this model shows the circular flow of income between the household sector and the business sector Coins and Currency in CirculationThe coins and bills that circulate in an economy that are not held by the U.S Treasury, at the Federal Reserve Bank, or in bank vaults ColludeWhen firms act together to reduce output and keep prices high Command EconomyAn economic system in which production, investment, prices, and incomes are determined centrally by a government Commodity MoneyAn item that is used as money, but which also has value from its use as something other than money Commodity-Backed CurrenciesDollar bills or other currencies with values backed up by gold or another commodity Comparative AdvantageThe ability of a party to produce a particular good or service at a lower opportunity cost versus another Competitive AdvantageSomething that places a company or a person above the competition Compound TariffsA tax on imported goods that is a combination of a fixed amount and an amount based on the value of the goods Concentration RatioAn early tool to measure the degree of monopoly power in an industry, which measures the share of the total sales in the industry that are accounted for by the largest firms, typically the top four to eight firms Constant Returns to ScaleWhen an increase in inputs (capital and labor) causes the same proportional increase in output. Expanding all inputs proportionately does not change the average cost of production Consumer GoodsGoods bought and used by consumers Consumer Price Index (CPI)A measure of inflation that U.S. government statisticians calculate based on the price level from a fixed basket of goods and services that represents the average consumer's purchases

Consumer Spending (consumption)The acquisition of goods and services by individuals or families Contractionary PolicyAn economic policy used to fight inflation by decreasing the money supply Cost of Living Adjustments (COLAs)A contractual provision that wage increases will keep up with inflation CountercyclicalMoving in the opposite direction of the business cycle of economic downturns and upswings Countervailing DutiesAn import tax imposed on certain goods to prevent dumping or counter export subsidies Crowding OutWhen government outbids private bond interest rates to get loans, money leaves the private sector and interest rates increase CurrencyPaper money Cyclical UnemploymentUnemployment that results when the overall demand for goods and services in an economy cannot support full employment. It occurs during periods of slow economic growth or during periods of economic contraction DeficitAn excess of expenditure or liabilities over income or assets in a given period Deficit SpendingA government practice of spending more than revenue collected in a given budget year DemandConsumers' willingness and ability to consume a given good Demand ElasticityHow responsive the quantity demanded is to a change in price in percentage terms Demand ScheduleA chart that shows the number of goods or services demanded at specific prices DepressionAn especially lengthy and deep decline in output DifferentiatedA product that is different from similar ones Discount RateThe minimum interest rate set by the Federal Reserve for lending to other banks Discouraged WorkersThose who have stopped looking for employment due to the lack of suitable positions available Discretionary SpendingA type of government spending that is implemented through an appropriations bill and is therefore optional