BEC JCE Social Studies 15 key terms

The condition in which human wants are unlimited but the resources available to satisfy them are limited. Scarcity forces people, businesses, and governments to make choices about how to use resources.

The value of the next best alternative given up when a person or group chooses one option over another. It measures the true cost of any decision in terms of forgone benefits.

A situation in which gaining one benefit requires sacrificing another. Decision makers weigh trade-offs when allocating limited time, money, or resources among competing goals.

The basic resources used to produce goods and services: land (natural resources), labor (human effort), capital (tools and machinery), and entrepreneurship (organizing the other three). Their availability shapes what an economy can produce.

Goods such as machines, buildings, and equipment that are used to produce other goods and services rather than being consumed directly. Investment in capital raises productivity over time.

The amount of output produced per unit of input, such as output per worker-hour. Rising productivity allows an economy to produce more with the same resources and supports higher living standards.

Splitting production into separate tasks performed by different workers or groups. Specialization lets each worker build skill at one task, which usually increases total output and efficiency.

Focusing effort on producing a limited range of goods or services in which a person, firm, or country has an advantage. Specialized producers then trade to obtain the other goods they need.

The ability to produce a good at a lower opportunity cost than another producer. Even a producer with an absolute disadvantage can gain from trade by specializing where its opportunity cost is lowest.

The interaction of how much sellers offer at each price and how much buyers want at each price. Their balance determines market price and quantity sold.

The price at which the quantity buyers are willing to purchase equals the quantity sellers are willing to offer. At this price there is neither a shortage nor a surplus.

A situation in which the quantity demanded exceeds the quantity supplied at a given price. Shortages typically push prices upward until buyers and sellers reach balance.

A measure of how strongly quantity demanded or supplied responds to a change in price or income. Demand for necessities tends to be inelastic, while demand for luxuries tends to be elastic.

Products that can replace one another for the same purpose, such as tea and coffee. When the price of one rises, demand for its substitute often increases.

A government rule setting the maximum price that may be charged for a good or service. If set below the equilibrium price, it usually creates shortages and waiting lists.

A government rule setting the minimum price that may be paid for a good or service. If set above the equilibrium price, it typically produces surpluses, as with some agricultural supports.

A sustained rise in the general level of prices across an economy. Inflation reduces the purchasing power of money and is often measured by changes in a consumer price index.

The total market value of all final goods and services produced within a country's borders during a set period, usually a year or quarter. It is a standard measure of economic output.

The share of the labor force that is actively seeking work but does not have a job. High unemployment signals unused labor resources and lost economic output.

The portion of the population that is either employed or actively looking for work. People who are retired, in school full time, or not seeking work are not counted in it.

The recurring pattern of expansion and contraction in economic activity over time. Its phases include growth, peak, recession, and trough, and they affect jobs, prices, and investment.

A significant decline in economic activity lasting more than a few months, often marked by falling output, rising unemployment, and reduced spending. Governments may respond with fiscal or monetary policy.

The use of government spending and taxation to influence the economy. Raising spending or cutting taxes can stimulate demand, while the reverse can slow inflation.

Actions by a central bank to manage the money supply and interest rates. These actions aim to control inflation, support employment, and stabilize the financial system.

The percentage charged for borrowing money or earned for saving it. Interest rates influence spending, investment, and the overall pace of economic activity.

The amount of goods and services that a given amount of money can buy. Purchasing power falls when prices rise faster than incomes.

The voluntary exchange of goods and services between people, businesses, or countries. Trade allows participants to obtain goods they cannot produce efficiently themselves.

A tax imposed on imported goods. Tariffs raise the price of imports, may protect domestic producers, and can invite retaliation from trading partners.

A method of comparing the expected costs of a decision with its expected benefits. It helps individuals and governments decide whether a project or policy is worthwhile.

An economic system in which prices and production are shaped mainly by private buyers and sellers rather than government direction. Competition and self-interest guide most decisions.

An economic system in which the government owns or directs major resources and decides what to produce and how to distribute it. Consumer choice plays a limited role.

An economic system combining private ownership and markets with government regulation and public services. Most modern economies, including the United States, fit this description.

Goods or services, such as national defense or street lighting, that are available to everyone and are hard to restrict to paying users. Markets tend to underprovide them, so governments often supply them.

A plan that estimates expected income and sets planned spending for a period. Budgets help households, businesses, and governments balance needs against limited funds.

Income not spent on current consumption and set aside for future use. Savings provide funds for investment and help households handle unexpected expenses.

The ability to borrow money now and repay it later, usually with interest. Using credit can fund large purchases but raises total costs when interest accumulates.