Economics Vocabulary #3

Contract

• an agreement between two or more parties that is enforceable in court

• a verbal agreement that is not legally binding

• a document that outlines the terms of a loan

• a promise made without any legal obligation

Competition

• the struggle among producers for the dollars of consumers

• a method of increasing prices for goods

• the collaboration between businesses to set prices

• the process of reducing production costs

Income Tax

• a tax on people's earnings (16th Amendment)

• a tax on property ownership

• a tax on sales transactions

• a tax on corporate profits

Economic Stimulus

• a policy designed to promote business activity and speed up economic growth

• a strategy to reduce government spending

• a method to increase taxes on corporations

• a plan to decrease unemployment benefits

Inflation

• an increase in prices with the value of money staying the same

• a decrease in prices with the value of money increasing

• a stable price level with fluctuating currency value

• a sudden drop in prices leading to deflation

Imports

• goods and services purchased from other countries

• products manufactured domestically

• items sold to other countries

• services provided by local businesses

Monopoly

• complete control of a type of good or service by one person or group

• a market structure with many competitors

• a situation where prices are determined by supply and demand

• a type of government regulation on prices

Circular Flow

• the pattern in which goods and services and resources flow in the marketplace

• a method of calculating economic growth

• a type of market structure

• a strategy for maximizing profits

Investment

• the action or process of placing money into businesses for profit

• a method of saving money in a bank account

• the act of spending money on luxury items

• a strategy for reducing expenses

Federal Reserve

• the central bank of the United States

• a private bank in New York

• a government agency for tax collection

• a financial institution for loans