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6.1: CK-12 Glossary

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    UNIT 1

    free enterprise system – economic system characterized by private ownership of businesses operated for profit with economic freedom for both consumers and producers

    scarcity – condition in which there are not enough resources available to produce everything that individuals demand

    opportunity cost – the value of goods and services that are given up in order to obtain an alternative good or service

    factors of production – the resources needed to produce goods and services, including land, labor, capital, and entrepreneurship

    resources – supplies of something of value

    economic system – process created to manage the production, consumption, and distribution of goods and services

    circular flow model – a visual representation showing the relationship between the factor market and the product market

    UNIT 2

    market – an arrangement that brings sellers and buyers together for economic transactions

    supply – the total amount of goods and services offered for sale at various prices

    demand – the total amount of goods and services consumers are willing to buy at various prices

    equilibrium price – the price at which the quantity supplied in the market matches the quantity demanded in the market

    absolute advantage – a condition that occurs when someone can produce goods and services cheaper than other producers

    comparative advantage – a condition that occurs when someone can produce at a lower opportunity cost than other producers

    specialization – the development of skills and knowledge associated with one job or one area of expertise

    pure competition – a market structure characterized by many producers supplying the same product and very few barriers to entry in the market

    monopolistic competition – a market structure characterized by many producers supplying similar but varied products with few barriers to entry to the market

    oligopoly – a market structure characterized by very few producers supplying similar products with high barriers to entry in the market

    monopoly – a market structure characterized by one producer with a unique product and very high barriers to entry in the market

    UNIT 3

    entrepreneurship – the willingness and innovation needed to risk starting a business

    sole proprietorship – a business owned and managed by a single individual

    partnership – a business owned and managed by two or more individuals as co-owners

    corporation – a business owned by shareholders and managed by directors and executives

    business cycle – a repetitive pattern of growth and decline in economic activity

    inflation – a general increase in the price of goods and services

    Gross Domestic Product – the market value of all goods and services produced in a country during a specific time period

    unemployment – condition in which those seeking jobs are unable to find jobs

    productivity – a measure of the efficiency of the production of goods and services

    UNIT 4

    monetary policy – strategy taken by a central banking system to regulate the supply of money

    fiscal policy – strategy taken by public officials regarding taxing and spending

    reserve requirement – the amount of money banks are required to keep and not lend out

    federal funds rate – the interest rate banks charge each other on loans

    discount rate – the interest rate the Federal Reserve Bank charges commercial banks for loans

    open market operations – a Federal Reserve practice of purchasing and selling government bonds intended to take money out or put money into the economy quickly

    currency – a physical item, such as bills and coins, used as a medium of exchange

    revenue – money raised by the government or money received by a firm doing business

    expenditure – a payment, cost, or the amount of money spent

    UNIT 5

    investment – providing money or capital to an enterprise with the expectation of making a financial gain

    compound interest – interest which is calculated on the initial principle and on the accumulated interest

    credit score – a number based on an individual’s credit history that indicates how much of a credit risk he may be

    risk/return relationship – the relationship between the risk of an investment and the expected return of the investment i

    interest – a payment made for the use of borrowing money

    open end credit – a line of credit that can be used repeatedly, within an established borrowing limit

    closed end credit – a loan for a set amount that requires regular payments at certain intervals

    secured loans – a loan that is obtained by offering an asset as collateral to ensure repayment of the loan

    unsecured loans – a loan that is obtained without the use of collateral

    budget – an itemized plan of income and expenses for a given period of time

    Freedom Week

    Property Rights- Property rights are theoretical socially-enforced constructs in economics for determining how a resource or economic good is used and owned. Resources can be owned by individuals, associations or governments.

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