Transcript ECON

Economics Vocabulary
Adam Smith–
an economist and philosopher,
who became famous for his
influential book “The Wealth
of Nations” written in 1776. He
is often called “the father of
capitalWealth, whether in money or
property, owned or employed
in business by an individual,
firm, corporation, etc.
capitalismAn economic system in which
the factories and businesses
that make and sell goods are
privately owned and the
owners make the decisions
about what goods to produce
free marketAn economic market in which
supply and demand are not
regulated or are regulated with
only minor restrictions
free tradeTrade between countries, free
from governmental
restrictions or duties
goodsArticles of trade; wares;
merchandise: examplecanned goods
incomeThe monetary payment received
for goods or services, or from
other sources, as rents or
To put money to use, by buying
or spending in something
offering potential profitable
returns, as interest, income, or
appreciation in value
investorsa person who invests money
servicesActivities performed by people,
firms, or government agencies
to satisfy economic wants
attempts by two or more individuals or
organizations to acquire the same
goods, services, or productive and
financial resources. Consumers
compete with other consumers for
goods and services. Producers
compete with other producers for
sales to consumers.
consumer choiceThe decisions a consumer
makes in the marketplace
including personal money
demandthe quantity of a good or service
that buyers are willing and
able to buy at all possible
prices during a period of time
expenditureThe act of using up, spending,
consuming something,
especially funds; consumption
free enterprisean economy that allows
business owners to compete in
the market with little or no
government control
inheritancesomething that is or may be
passed down; property passed
at the owner’s death to the heir
or those entitled to receive;
profitincome received for
entrepreneurial skills and risk
taking, calculated by
subtracting all of a firms
explicit and implicit costs from
its total revenues.
self interest–
regard for one’s own interest or
advantage, especially with
disregard for others
supplyThe amount of a good or service
that producers are willing and
able to offer for sale at each
possible price during a given
period of time
net income–
The amount of income left after taxes
have been paid
human resourcethe health, education,
experience, training, skills and
values of people. Also known
as human capital.
wagePayments for labor services that
are directly tied to time
worked, or to the number of
units of output produced.
budgetA spending and savings plan,
based on estimated income
and expenses for an individual
or an organization, covering a
specific time period.
savingsMoney set aside for a future
use that is held in easilyaccessed accounts, such as
savings accounts and
certificates of deposit (CDs)
taxesMandatory payments to
governments by households
and businesses.
fixed expenseExpenditures that are the same
from week to week or month
to month, such as mortgage or
rent payments and car
variable expense–
Expenditures that change from
week to week or month to
month– food, clothing,
recreation and entertainment,
for example.
people who consume or use goods and
checka note that gives a bank
permission to make a payment
debit cardgives the bank permission to
make a payment electronically
money ordera form of cash bought for a
specific amount and signed
over by the purchaser to the
person or firm named on the
money order. People must pay
a fee for a money order.
credit cardallows consumers the privilege of
buying something now and
paying for it later. A credit card
enables consumers to borrow
(receive a loan). It creates a debt
for the consumer that must be
repaid later.
finance chargethe price charged for using
someone’s money.
Financial certificates that represent
part-ownership in a company (stocks)
or a debt by a company (bonds)
stockThe capital invested in a
corporation and represented
by shares of ownership.
Stockholders have a share in
the wealth of the corporations
of which they are part owner.
New York Stock Exchangean “auction market” where
competition among buyers and
sellers determines stock price.
diverse (diversify)different from each other/ to
invest in different companies
or stocks
going publicis the expression used for a
company offering shares of stock
to the general public for the first
time. (A company goes public to
raise the funds it needs to expand
its business by creating new jobs,
offering new services and
developing new products)
brokeran agent who buys or sells
securities on a commission
basis (that is, for a fee based
on the total value of the
Command Economy
• An economy in which production, investment,
prices, income is decided by the government.
Student Loan
• Debt-money owed on a loan taken to pay for
educational expenses (i.e. college or university)
• The charging of real (or personal) property by a
debtor to a creditor as a security for a debt, on
the condition that it be returned on payment of
the debt within a certain time period.
• i.e. loan for 30 years for a house.
Checking account
• Bank account where you can take money from
using checks.
Checkbook register
• Journal where you can record the number of
withdrawals and deposits in your checking
• Period of temporary economic decline in which
trade is reduced.
• Sustained long term downturn of the economy.
• A person, company, or country that makes,
grows, or supplies goods or commodities for
Gross income
• Person’s personal income.
Net income
• Company’s total earnings
• Services such as electricity, water, etc.