Basic Economic Terms

Seite 1

Basic Economic Terms

1/20/16

Economics – The

most efficient use of your resources to accomplish your goals

What

are your goals?

Law of supply and

demand-

·

When the supply of a good or service is scarce

and wanted by many people, its price increases.

·

When there is larger amount of the good or

service than the number of people who want it, its price decreases.

Marginal Utility

·

Whenever you have more of something its use for

your diminishes. Thus, $100 woould be more valuable when you eat $1000/month

Gross Domestic

Product (GDP)

·

fundamental measure of the size of an economy,

equal to the som of incomes of all people

Growth Rate

·

The growth of an economy is commonly measured in

terms of GDP growth rate

Inflation

·

Measure of increase in the general level of

prices for goods and services.

Interest Rates

·

When you loan money and you expect something in

return. The excess is interest.

·

Positive number that measures how much excess

you will get.

·

Right now

the Fed’s key interest rate ranges from 0.25% to 0.5% .

Opportunity Cost

·

The cost of doing this instead of doing this.

·

When you do an activity, you tend to equate how

good the activity is when compared to the alternatives.