Economics Unit 9: Financial Institutions

people with all of their abilities, efforts, and skills – Labor
Normal goods – goods or services that see in an increase in demand when income rises
Traditional Economy – Economy system in which the allocation of scarce resources and other economic activity is the result of ritual habit or custom.
Incentive – Things that motivate or incite people to change a behavior
In what form to resources moved from household to business – Money payments for goods and services
Investment – spending on capital equipment, inventories, and structures, including household purchases of new housing
If the nominal interest rate is 4 percent and the current rate of inflation is 2 percent, the real interest rate is
Quotas – a specific limit placed on the number of imports that can enter a country
Currency – Money that is used as a way to trade goods and services: Paper bills, coins
human resources – Human effort.
Economic Growth correlates with – higher standard of living
Monopoly – when one business controls all or most of a particular industry or market
inflation – persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency.
If the nоminаl interest rаte is 4 percent аnd the current rate оf inflatiоn is 2 percent, the real interest rate is
unit-of-account costs – the costs arising from the way inflation makes money a less reliable unit of measurement.
Factors that affect supply – The price of inputs
Number of producers in market
Leakages – withdrawals of possible spending from the circular flow of income.

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