| A | B |
|---|
| absolute advantage | the ability of one country or company, using the same quantity of resources as another country or company, to produce a particular product at a lower absolute cost. |
| antitrust legislation | laws passed by federal and state governments to prevent new monopolies and break up existing ones. |
| buying on margin | paying a fraction of the cost of an item; for example, the practice of buying stocks during the 1920s at a small fraction of their fall price. |
| capitalism | an economy in which private individuals own the means of production; a market economy. |
| circular flow model | a diagram that shows the flow of economic activity among sectors of the economy. |
| command economy | an economy in which all decisions on production and consumption are made by a central government. |
| communism | an economy in which all the means of production are controlled by the government; a command economy. |
| comparative advantage | the ability to produce goods or services at a lower opportunity cost than other individuals or countries. |
| Credit | the purchase of goods or services in the present with the promise to pay for them in the future. |
| free enterprise | individuals make economic decisions in market economy |
| global economy | the interconnections of the market that go beyond national boundaries. |
| depression | a period of economic slowdown in which there is high unemployment, business failures, and the economy operates far below its capacity. |
| exports | goods sold to other countries. |
| Gross Domestic Product (GDP) | the value of all final goods and services produced within a country's borders in a given year. |
| imports | goods purchased from other countries. |
| international trade | the exchange of goods between countries. |
| laissez faire | an economy in which government minimizes its interference. |
| market economy | an economy in which decisions on production and consumption are made by individuals acting as buyers and sellers. |
| mixed economy | an economy that combines features of more than one of the traditional, command, and market systems. |
| monetary policy | a policy that involves changing the rate of growth of the supply of money in circulation in order to affect the cost and availability of credit; the rates are established by the Federal Reserve System. |
| money | anything used as a medium of exchange. |
| opportunity cost | the value of the next best alternative given up when a choice is made. |
| productive resources | the resources used to make goods and services; for example, natural resources, human resources, and capital goods. |
| protectionism | efforts to restrict imports in order to protect domestic industries. |
| quotas | the maximum number of people or products that may be admitted to an institution or country. |
| recession | a downturn in the business cycle during which the Gross Domestic Product (GDP) does not grow for at least 6 months. |
| regulation | the act of controlling or directing according to ride, principle, or law. |
| socialism | an economy in which the government controls the major means of production; a mixed economy. |
| specialization | the concentration of production on fewer kinds of goods and services than are consumed. |
| standard of living | a person's or group's level of material wellbeing, as measured by education, housing, health care, and nutrition. |
| tariffs | taxes imposed on imported goods. |
| thesis | a proposition that is supported by an argument. |
| traditional economy | an economy in which decisions on production and consumption are based upon customs, beliefs, rituals, and habits. |
| urbanization | the movement of people from rural areas to cities, usually associated with industrialization. |
