Economic Vocabulary Book

Economy

• Economy refers to the wealth or the resources of a country.
• It could also refer to the wealth or resources of a part of the world.
• In today's world everything we are able to do depends on the economy.
• It is important that the economy is strong.
• The economy depends on the production & consumption of goods/services.

Free Enterprise

• Free enterprise is a system that lets businesses compete.
• Free enterprise means that the government doesn't control the business.
• In today's world we see free enterprise systems in most western countries.
• America is a free enterprise economic system.
• There are very limited government controls on businesses.

Socialism

• Socialism is a tranistionary state between capitalism and communism.
• In socialism there is a belief that the society should regulate business.
• Businesses controlled by socialism have a lot of rules.
• There isn't much competition between businesses in socialism.
• It is based on Karl Marx' theories that also inspired communism.

Communism

• Communism is a belief that property is all own by the government.
• People are paid by the government based on what they need.
• It is the opposite of capitalism. Hard work isn't rewarded.
• It is a belief that there are no "class" differences.
• It's a idea based on communal ownership and sharing.

Goods

• Goods are physical items that meet the needs of consumers.
• Goods are produced and sold for a profit.

Services

• Services are intangible outcomes of human effort.
• Services meet the needs or demands of consumers.
• Some services can be obtained at salons, hotels or by airlines.
• America has become more service oriented in the last 20 years.

Consumers

• Consumers are people who purchase good and services.
• Consumers make purchases for personal use.
• Consumer needs and demands drive the economy.
• In America we consume more than we are producing.

Supply and Demand

• Supply and demand is an idea.
• If there is more demand by consumers the supply goes down.
• If there is more supply than consumers want the supply goes up
• If there is a lot of supply (low demand) the price is low.
• If there is a lot of demand (low supply) the price is high.

Scarcity

• Scarcity means that something is rare or hard to find.
• If goods are in short supply they are scarce.
• Scarcity can cause prices to go up if demand is high.

Natural Resources

• Anything that people use that comes from nature.
• There are renewable and nonrewable resources.
• Soil, sunlight, water, and wood are renewable.
• Coal and oil are nonrenewable resources.
• Demand is high & supply is low.  Countries with many resources get richer.

About the Author, Caitlin Fawaz