Ecnomic Terms

Vocabulary: Terms to know

    • Buying power:
The ability to purchase goods and services.

    • Currency exchange:
A market for the trading of currencies.

    • Per capita income:
The total national income divided by the number of people in the nation

    • Factors of production:
The factors of production are the resources that are necessary for production. They are usually classified into 4 different groups:
1. Land - all natural resources (minerals and other raw materials)
2. Labor - all human resources
3. Capital - all man-made aids to production (machinery, equipment and so on).
4. Enterprise - entrepreneurial ability. The rate of economic growth that an economy can manage will be affected by the quantity and the quality of the factors of production they have.
    • Global:
Involving the entire earth

    • Productivity:
The ratio of the quantity and quality of units produced to the labor per unit of time

    • Labor:
A social class comprising those who do manual labor or work for wages

    • Wages:
A wage is compensation, usually financial, received by workers in exchange for their labor

    • Free trade agreements:
A designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them

    • Tariff:
Duty; a government tax on imports or exports

    • Absolute advantages:
The name for the ability of one entity to engage in more efficient production than another entity. Assuming equal inputs, the entity with an absolute advantage will have a greater output.

    • Comparative advantages:
The name for the ability of one business entity to engage in production at a lower opportunity cost than another entity. Comparative advantage, rather than absolute advantage, is useful in determining what should be produced and what should be acquired though trade.
    • Imports:
To bring or carry in from an outside source, especially to bring in...