Economics Vocab

General Economics

• Economics: The study of how people make choices about what to make, buy, sell, and use, especially when they can't have everything they want. 💰

• Scarcity: The basic problem of economics where we have unlimited wants and needs but only limited resources to satisfy them. Think of it as not having enough of something for everyone who wants it.

• Production: The process of creating goods (like iPhones) or providing services (like a haircut).

• Consumption: The act of using goods or services. When you eat a pizza, you are consuming it. 🍕

• Distribution: The process of getting goods and services from the producer to the consumer.

---

The Players

• Households: Individuals or families who buy goods and services and also provide the labor that businesses need.

• Firms: Businesses or companies that produce and sell goods and services. (e.g., Apple, Nike, your local pizza shop).

• Investor: A person or organization that puts money into a business or financial plan with the expectation of making a profit.

• Sole-Proprietor: A person who is the single owner of a business. They are responsible for everything!

---

Markets & Trade

• Supply: How much of a good or service is available for people to buy.

• Demand: How much of a good or service people want to buy.

• Free Market: An economic system where prices are determined by supply and demand, with very little government control.

• Socialism: An economic system where the government or the community as a whole owns and controls the most important industries and resources.

• Consumer Sovereignty: The idea that consumers have the power because what they choose to buy ultimately determines what businesses will produce.

• Import: A good or service brought into a country from another country.

• Export: A good or service sent out of a country to be sold somewhere else.

---

Government's Role

• Subsidy: A payment from the government to a business or industry to help keep the price of a product or service low.

• Tax: Money that people and businesses are required to pay to the government so it can fund public services like schools and roads. 🏫

• Tariff: A special tax placed on goods imported from another country, making them more expensive.

---

Choices & Costs

• Trade-Off: The act of giving up one benefit in order to gain another, greater benefit. You can't be in two places at once, so you have to make a trade-off.

• Opportunity Cost: The value of the next-best thing you gave up when you made a choice. If you choose to buy a video game instead of a concert ticket, the concert ticket is your opportunity cost.

---

Loans & Credit

• Loan: Money that is borrowed and is expected to be paid back, usually with an extra fee.

• Interest: The extra money you pay for borrowing money, or the money you earn for lending money.

• Principal: The original amount of money borrowed in a loan.

• Term: The amount of time you have to repay a loan.

• Interest Rate: The percentage of the loan amount that a lender charges for borrowing money.

• Mortgage: A specific type of loan used to buy property, like a house. 🏠

• Fixed-Rate Mortgage: A home loan where the interest rate stays the same for the entire term of the loan.

• Adjustable-Rate Mortgage: A home loan where the interest rate can change over time, meaning your monthly payment could go up or down.

• Credit Card: A card that allows you to buy things by taking out a loan from the bank that issued the card. You have to pay the money back later.

• Delinquency: When you are late making a payment on a loan.

• Loan Default: When you completely fail to pay back a loan according to the agreement. This is very serious and hurts your ability to borrow in the future.

---

Investing

• Stock Market: A place where shares of ownership in companies (called stocks) are bought and sold.

• Investor: Someone who uses their money to buy stocks or other assets with the hope that they will grow in value over time.

Perfect is the Enemy of Good - Perfect Pizza

Perfect Pizza

Your goal is to make the most profit in one day by hiring the best team you can afford.

Hourly Budget: $60.00

Your Hourly Cost: $0.00

Remaining Hourly Budget: $60.00

1. Choose Your Cook

Expert Chef

$25.00 / hour

Highest quality, but at a high cost. Delivers an exceptional return on investment.

Hourly Return: $30.00

Regular Cook

$18.75 / hour

A reliable and consistent choice. A safe bet with a decent return.

Hourly Return: $22.50

Teenager Cook

$12.00 / hour

The cheapest option available. What you save in cost, you might lose in returns.

Hourly Return: $13.75

2. Choose Your Delivery Driver

Pro Racer

$23.75 / hour

Lightning fast deliveries. Customers love the speed, boosting your returns.

Hourly Return: $26.25

Standard Driver

$17.50 / hour

Safe, reliable, and on-time. A solid choice that gets the job done.

Hourly Return: $20.00

Kid on a Bicycle

$10.00 / hour

The most economical option, but slow deliveries mean lower returns.

Hourly Return: $8.75

3. Choose Your Cashier

Charming Salesperson

$21.25 / hour

Excellent at upselling. They will significantly increase your revenue per order.

Hourly Return: $25.00

Polite Cashier

$15.00 / hour

Friendly and efficient. Keeps customers happy and the line moving.

Hourly Return: $15.00

Grumpy Teen

$11.00 / hour

They show up. That's about it. The low cost is the only selling point.

Hourly Return: $7.50

4. Choose Your Ingredients

Fancy Italian Imports

$22.50 / hour

Premium ingredients let you charge premium prices, yielding the highest return.

Hourly Return: $56.25

Specialty Toppings

$13.75 / hour

Good quality for a good price. This is a balanced choice for steady returns.

Hourly Return: $40.00

Basic Toppings

$7.50 / hour

Low cost means low prices. The return isn't great, but it's very affordable.

Hourly Return: $25.00

Day's Results

Total Revenue: $0.00

Total Costs (8 hours): $0.00

Final Profit: $0.00

Financial Literacy Quiz

Personal Finance Quiz

Make the most financially responsible choice.

Score: 0 / 0

Quiz Complete!

You've reached the top!

Your final score is:

0 / 0

Continue to Next Step

Climb the Ladder of
Financial Literacy!

Test export quiz

One-Question Quiz

First Name: Last Name: Class Period: Select a Period 1st Period 2nd Period 3rd Period 4th Period

What is the capital of Ohio?

Columbus
Cleveland
Cincinnati

Trickle Down Economics: A Supply Side Perspective

Trickle Down Economics: A Supply Side Perspective

• Definition of Supply Side Economics

• Known as trickle down economics, it is based on the idea that reducing costs for businesses can lead to overall economic growth.

• By making it more affordable for firms to operate, they can pass savings onto consumers through lower prices.

• Mechanism of Economic Growth

• When firms lower prices, consumers are more likely to purchase additional goods.

• Increased consumer spending leads to a higher demand for products, prompting firms to expand production.

• As production increases, firms need to hire more workers, leading to job creation and further stimulating household spending.

• This cycle continues: more jobs mean more income, which results in increased consumer purchasing, thereby growing the economy.

• Political Perspectives

• Republican View:

• Advocates believe that reducing taxes and cutting regulations allows firms to operate more efficiently.

• The proposed plan is straightforward: cut taxes for everyone, deregulate industries, and let the market determine successful firms based on consumer demand.

• The belief is that once taxes are lowered, firms can reinvest savings into their businesses or lower prices for consumers.

• Democrat View:

• Democrats, on the other hand, may not reduce taxes but instead provide subsidies to businesses.

• The government hands out financial support to firms, allowing them to lower prices without necessarily improving operational efficiency.

• This approach focuses on targeted financial assistance to select firms, with the hope that it will stimulate economic growth.

• Government Involvement

• Republican Policy:

• Emphasizes a hands-off approach, reducing government interference in the market.

• Once tax cuts and deregulations are in place, Republicans advocate for minimal ongoing government involvement, allowing consumers to dictate market success through their spending choices.

• Democrat Policy:

• Involves more active government participation in the economy.

• The government selects specific firms and industries for financial support, which can lead to a perception of favoritism or inefficiency.

• Critics argue that this could create a system where money is not directed to the most productive businesses, but rather to those that are politically connected.

• Efficiency of Subsidies

• The effectiveness of government subsidies is questioned.

• Critics point to instances where funds are allocated to less efficient firms, detracting from overall economic productivity.

• Example: The Biden Administration's funding choices have been challenged for not supporting highly productive firms like Tesla while directing resources to less efficient projects.

• Consumer Choice and Market Dynamics

• In a supply side economy, consumer preferences ultimately decide which firms thrive.

• Even if inefficient firms receive tax breaks or subsidies, they may fail if consumers do not support them through purchases.

• Over time, the market can "clear out" ineffective businesses, leading to a more efficient economic landscape.

• Long-Term Economic Impact

• Sustained government support for unproductive firms can lead to increased taxpayer burden, reducing disposable income for consumers.

• Critics warn that this can stifle overall economic growth, as resources are not being used efficiently.

• The long-term viability of an economy relying heavily on subsidies versus one driven by consumer choice remains a critical debate.

• Future Implications

• The video contrasts the economic policies of the previous Democratic administration with potential Republican strategies.

• It raises questions about the effectiveness of subsidy-based growth versus supply side economics centered on tax cuts and deregulation.

• Observations are made about the anticipated outcomes of the two approaches, emphasizing the need for consumers to make informed choices that shape the economic landscape.