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38 Cards in this Set
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- Back
budget deficit
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the amount by which the expenditures of the federal government exceed its revenues in any year
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budget surplus
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the amount by which the revenues of the federal government exceed its expenditures in any year
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business cycle
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recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, trough, and expansion phases
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business firm
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an organization that employs resources to produce a good or service for profit and owns and operates one or more plants
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centrally planned economy
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government determination of the objectives of the economy and how resources will be directed to attain those goals
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circular flow diagram
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an illustration showing the flow of resources from households to firms and of products from firms to households; these flows are accompanied by reverse flows of money from firms to households and from households to firms
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consumer sovereignty
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determination by consumers of the types and quantities of gppds and services that will be produced with the scarce resources of the economy; consumers' direction of production though their dollar votes
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corporation
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a legal entity chartered by a state or the federal government that is distinct and separate from the individuals who own it
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creative destruction
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the hypothesis that the creation of new products and production methods simultaneously destroys the market power of existing monopolies
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derived demand
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the demand for a resource that depends on the demand for the products it helps to produce
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economic efficiency
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the use of the minimum necessary resources to obtain the socially optimal amounts of goods and services; entails both productive and allocative efficiencies
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exports
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goods and servies produced in a nation and sold to buyers in other nations
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externality
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a cost or benefit from production or consumption, accruing without compensation to someone other than the buyers and sellers of the product
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Federal Reserve
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the US central bank, consisting of the Board of Governors of the Federal Reserve and the 12 Federal Reserve banks, which controls the lending activity of the nation's banks and thrifts and thus, the money supply; commonly referred to as the Fed
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financial intermediaries
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institutions that accept deposits from savers and make loans to borrowers
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fiscal policy
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changes in government spending and tax collections designed to achieve full-employment and noninflationary domestic output
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free ride
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the enjoyment of the benefits of a good by a producer or consumer without having to pay for the good
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household
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an economic unit that provides the economy with resources and uses the income received to purchase goods and services that satisfy economic wants
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imports
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spending by individuals, firms, and governments for goods and services produced in foreign nations
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investment
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in economies, spending for the production and accumulation of capital and additions to inventories
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monetary policy
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a central bank's changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth
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monopoly
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a market structure in which the number of sellers is so small that each seller is able to influence the total supply and the price of the good or service
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multinational business
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a firm that owns and operates producing units in foreign countries
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net exports
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the difference between the value of exports and the value of the imports
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partnership
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a business with two or more owners who share the firm's profits and losses
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personal consumption
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the expenditures of households for durable and nondurable consumer goods and services
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private property rights
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the right of ownership
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private sector
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households, businesses, and the international sector
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public good
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a good whose consumption by one person does not diminish the quantity or quality available for others and access to which cannot be restricted
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public sector
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the government
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rent seeking
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the use of resources simply to transfer wealth from one group to another without increasing production or total wealth
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roundabout production
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the construction and use of capital to aid in the production of consumer goods
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sole proprietorship
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an unincorporated firm owned and operated by one person
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trade balance
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the export of goods or services of a nation minus its imports of goods of services
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trade deficit
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the amount by which a nation's imports exceed its exports
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trade surplus
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the amount by which a nation's exports exceed its imports
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transfer payment
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a payment of money or goods or services by a government to a household or firm for which the payer receives no good or service directly in return
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voluntary exchange
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act of buyers and sellers freely and willingly engaging in market transactions; characteristic of capitalism and free enterprise
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