Basic Economic Terms

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.