Terms...

Bonds - A certificate issued for sale by a government or by a private company that promises to repay the bond holder after giving him or her an agreed rate of interest for a certain period. See stocks.

Capital – either (A) money to invest or (B) a producer good (see below).

Capital goods – see producer goods.

Capitalism – 1. free enterprise, below; 2. technically, the accumulation of capital for large-scale production.

Classical economics – the basic ideas o modern economic science.

Command economy – wages ad prices are set by the government; the government also directs the economy in other ways.

Coin – a disc consisting of a certain amount of a precious metal (i.e., silver or gold) of a fixed purity . (E.g., .900 fine = 90% pure.)

Competition - A kind of "contest" for some prize; honor, or advantage; in economics, a contest among sellers and among buyers. Imperfect Competition - A market condition marked by a limited number of sellers or buyers.

Compulsory savings - Saving that is directed and enforced by the government (social security taxes.)

Consumer - People who use goods, including services. (As opposed to producers.)

Consumer goods – goods produced for direct use by the consumer, e.g., clothes, food, eyeglasses.

Creditor - lender; one to whom money is owed.

Debtor - borrower; one who owes something, such as money.

Demand - The quantity of a good that people will buy at a certain price or the willingness and ability of buyers to buy a good at some given price.

Desire – as used by Larry Burkett, a good wished for, but even less necessary than a want.
Diminishing Marginal Valuation – see value

Dividends - Money or shares of stock paid to people who own stock (shares) Compound Interest- money earned on an investment and on the interest added to the investment.

Enterprise – a bold commercial or industrial undertaking.

Entrepreneur - A person who organizes and manages any enterprise, especially a business, making bold moves and taking personal risk. (One who risks personal loss to market a new product, service, or idea.)

Four Factors of Production

• Natural Resources

• Labor

• Capital

• Management

Free Enterprise – essentially, a market economy; people are free to start and manage their own business without government interference; they are free to succeed OR to fail.

Geographic Specialization - Division of labor among regions and countries.

GNP (Gross National Product) - The total money value of all goods, including services, produced and paid for in a nation in one year.

Industrial Revolution – period in the 18^th century in which steam-powered machinery was first used in production; the use of machine-assisted labor took off like wildfire.

Interest - Payment of loans; money paid for the use of money belonging to others.

Investments (life insurance, pension plans) - The using of money or capital in order to make a profit, especially interest or income.

Labor – "intelligent work," whether manual or mental; the greatest % of the cost of a good.

Liquid Assets - Savings that can be converted into cash without much difficulty or delay.

Market economy – wages and prices are determined by competition in the market.

Management – oversight; intelligent directing and supervising of resources: natural resources, "human" resources (labor), and capital.

Mercantilism – economic theory, popular in the 16^th – 18^th centuries, which states that a countries wealth consists chiefly of its of its gold and silver reserves. Countries were encouraged to build up a favorable balance of trade with other countries, and colonies existed primarily for the benefit of the mother country.

Mixed economy – one one that combines some features of a market economy with those of a command economy.

Natural resources – land and raw materials in a given area.

Need (Necessity) – a good that would be difficult to do without.

Opportunity Costs (pp. 105-106)- An element in the real or true cost of a good or service. Signifies the cost of foregoing the next-best good available to a producer or a buyer. What good the producer or buyer must give up in order to obtain the good he chooses to acquire.

Outgo (costs) see list pg.107

Physiocrats – those who believed in free economic competition, teaching that real wealth comes from the land a country has (think agriculture and mining), and who encouraged free labor as opposed to forced labor. Physiocrats laid the foundation for classical economics.

Poverty – a lack of goods (i.e., needs go unfulfilled).

Principles of Economics – see p. 27 in the text.

Producer - People who work to provide goods (as opposed to consumers).

Producer goods (Capital goods) – goods used to make other goods, e.g., farm tools, lathes, or an injection mold. A hammer may be a consumer good for a homeowner but is always a producer good in the hands of a professional carpenter.

Prosperity – in strictly economic terms, the condition of enjoying many goods/services; economic success.

Savings (postponed consumption) - Postponing the spending of money; postponing the use of a good.

Savings Accounts (vs. checking accounts, stocks, etc.)- “ Money that a person person deposits in a bank and which the person withdraws from the bank by writing checks; demand deposits. — investments in some industrial or commercial company or corporation; shares in a company.

Scarcity - Smallness of supply. All goods that have value are scarce.

Shortage - Condition in which there is temporary lack of a good that ordinarily can be supplied in response to demand.

Socialism – see below
Specialization - The concentrating of one’s efforts in a particular activity or field. Division of Labor- The separation of workers into different jobs so that more and better goods can be produced; specialization.

State – a nation.

Stocks – the capital of a company/corporation divided into equal shares; shares in a company (a form of investment). See bonds.

Subsistence economy – an economic system that provides just enough for people to get by; an agrarian economy providing a hand-to-mouth existence with no surplus of goods stored up and few or no capital goods.

Supply -The quantity of a good for sale at a certain price or the amount of that good which sellers are willing to sell at a given price.

Supply- side economics - A term to describe economic policies that emphasize a swift and steady increase in the supply of goods.

Value - in economics, what people are willing to pay for a good; worth; Diminishing Marginal Valuation- The decreased worth of a good as the quantity of the good is increased.

Value-in-use - The worth of a good to its owner, determined by what use the owner can make of the good.

Value-in-exchange - Price; the trading worth of a good; trading value.

Wage of Management - Money paid to the hired manager of a business. Vs. True Profit- The gain of a firm or other enterprise after all expenses of production and distribution have been deducted from gross income.

Want - A human desire to have a certain good or kind of good.

Wealth – abundance of goods.

From www.encyclopedia.com:
Socialism:
Related: Political Science
general term for the political and economic theory that advocates a system of collective or government ownership and management of the means of production and distribution of goods. Because of the collective nature of socialism, it is to be contrasted to the doctrine of the sanctity of private property that characterizes capitalism . Where capitalism stresses competition and profit, socialism calls for cooperation and social service.     In a broader sense, the term socialism is often used loosely to describe economic theories ranging from those that hold that only certain public utilities and natural resources should be owned by the state to those holding that the state should assume responsibility for all economic planning and direction. In the past 150 years there have been innumerable differing socialist programs. For this reason socialism as a doctrine is ill defined, although its main purpose, the establishment of cooperation in place of competition remains fixed. Columbia Encyclopedia, Sixth Edition, Copyright © 2003. Used by permission.

People to know...

Adam Smith - Founder of modern economics. He wrote The Wealth Of Nations, and possibly the science of economics would have been developed more slowly or grown in a different way without this man. Book since 1776.

Friedrich August von Hayek (1899-1992) was an economist of the Austrian School noted for his defense of free-market capitalism against a rising tide of socialism thought in the mid-20th century. Hayek said that socialism necessarily led to fascism as central planning overrode individual preferences in economic and social life. (from the article"Friedrich Hayek" at www.wikipedia.com .) He is credited with successfully repudiating Keynesian economics and solving the problems it caused in society. More details...

John Maynard Keynes/Keynesian economics – deficit budgets used to try to promote economic growth.

Van buck-

Lyndon Johnson — “Social Service” projects. “Great Society” plan (Medicare and Medicaid were among those projects, also public housing.)

FDR (Franklin Delano Roosevelt) — Elected president in the throes of the Great Depression (1932). Promoted his "New Deal" (Keynesian economics). "Brain Trust"

Ronald Reagan — Reagan US president (1981-89) adopted supply-side economics to increase supply of goods and stop inflation. Deregulated many industries such as telephone, airline, etc. (Famous for “Reaganomics” & “trickle-down” economics)

Margaret Thatcher - English Prime Minister during Reagan's presidency (1980's); a free-marketer, Thatcher deregulated many industries and privatized many government-owned businesses. A good friend of Reagan's, she shared his free-market views.

­Special thanks to Dan Erickson '03 for unwittingly providing this page. Best wishes at CCC, Gazelle!