| A | B |
|---|
| scarcity | the basic economic problem; the conflict between wants and limited resources |
| capital | tools, equipment and buildings used in producing goods and services |
| economic decision making | process of choosing which want will be satisfied |
| factors of production | means through which goods and services are produced |
| labor | people who work to produce goods and services |
| natural resources | raw materials supplied by nature |
| needs | things that are necessary for survival |
| economic system | nation's plan for answering the key economic questions |
| wants | things that are not necessary for survival but add pleasure to our lives |
| custom based economy | system where goods produced the way they always have been |
| directed economy | system where ownership of resources is by government |
| market economy | system where individuals are free to engage in business transactions |
| capitalism | the economic resources are privately owned by individuals |
| private enterprise | right of individuals to choose business options |
| profit | the money left from sales after subtracting all costs of the business |
| profit motive | desire to work hard in order to earn a higher profit |
| competition | rivalry among businesses to sell goods/services |
| demand | the quantity of product or service that consumers are willing to buy at a certain price |
| supply | the quantity of product or service that businesses are willing to sell at a certain price |
| standard of living | the way you live as measured by the kinds and quality of goods you can afford |
| labor productivity | the quantity of a good an average worker can produce |
| public goods | something needed by a community & provided by the government |
| GDP | total dollar value of all final goods/services produced in a country during 1 year |
| business cycle | the movement of the economy from one condition to another |
| prosperity | phase of business cycle when unemployment low, people feel good, business producing lots of goods |
| recession | phase of business cycle where demad begins to decrease, businesses lower production, unemployment starts to increase |
| depression | phase of business cycle marked by severe unemployment, weak sales, & GDP rapidly falls |
| recovery | phase of business cycle which unemployment begins to decrease, demand increases and GDP begins to rise again |
| inflation | sustained increase in general level of prices |
| deflation | decrease in general level of prices |
