13 July 2011
The Pros and Cons of Laissez Faire Economics
Laissez faire economics are derived from the writings of Adam Smith, and it was the
focus of his book, The Wealth of Nations. In it, he mentions how the individual intends only his
Stagflation is a period of stagnant growth combined with inflation. This is an example of
economic conditions that occur at the same time.
GDP gap is the difference between the actual GDP and the potential GDP that could be
Business cycles are largely systematic ups and downs of real GDP. These often interrupt
Business fluctuations are the rise and fall of real GDP over time in a nonsystematic
manner. This is another way in which
Ch. 3 Study Guide
Sole proprietorship is a business owed and run by one person. They are the smallest of
business organizations in terms of size.
Unlimited liability means that the owner of a proprietorship is personally and fully
Price is the monetary value of a product as established by its supply and demand. It helps communicate
information and provide incentives to both buyers and sellers.
Rationing is a system under which an agency such as government
Gross Domestic Product is the dollar amount of all final goods and services produced within a
countrys national borders in a year. It is the single most important measure of the economys
overall economic performance.
Day #3 Assignment
Supply is the amount of a product that would be offered for sale at all possible prices that could prevail in
the market. This is based upon decisions made by producers.
Law of Supply states that suppliers will normally off
Economic products are goods and services that are useful, relatively scarce, and
transferable to others. They are limited in availability and create the scarcity that
demands a price.
Goods are items that are economically useful
Demand is the desire, ability, and willingness to buy a product. It is a microeconomic concept
and people who have it can compete with others who have similar demands.
Microeconomics is the area of economics that deals with beha