Economics Micro & Macro (CliffsAP)

CliffsAP Economics Micro & Macro

B

balance of payment:A record of a country’s trade in goods, services, and financial assets relative to international

dealings.

balance of trade:The equilibrium in the merchandise account in the United States’ balance payments.

balanced budget multiplier:A measure of the impact that government spending and taxes has on a nation’s equilibrium

output.

barriers to entry:Any variable that prevents a firm from entering an industry, such as price control or market share.

barter:Exchanging goods and services without using money.

base year:A year that is used for relative analysis with inflation and output.

bilateral monopoly:When a monopolistic buyer of resources faces a monopoly seller of resources.

bond:A binding agreement between a borrower and a lender that allows the lender to receive interest payments as well

as the repayment of the principal amount.

break-even price:A price that is equal to the minimum point of the average total cost curve.

budget deficit:The gap that results when spending exceeds revenue.

budget line:A line showing all the combinations of goods that can be purchased with a given amount of income.

budget surplus:The gap that results when spending is less than revenue.

business cycle:The normal fluctuation of GDP that includes contractions, expansions, peaks, and troughs.

business firm:A business organization controlled by management and entrepreneurs.

business sector:The part of an economy that consists of individuals who rent or purchase factors of production to

create revenue by the selling of goods and services.

C

capital:Anything that is used to make another good or service. Education, machines, and building space are all consid-

ered capital.

capital account:The record in the balance of payments of the flow of financial assets into and out of the country.

capital control:Government-controlled restriction of capital into and out of the country.

capital gain:A rise in the price of capital.

capitalism:The notion of participating in an economy with supply and demand as regulating forces rather than the

government.

cartel:A formal organization formed of independent entities with the intention to control price and output in a specific

market.

cash transfers:Money allocated from one group, sometimes the government, to another group.

central bank: A money-monitoring organization that regulates banks in the economy and controls the nation’s money

supply.

centrally planned economy:An economic system in which the government owns and controls the factors of production.

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