Chapter 2 Economics Vocabulary Economic System an organized way in which a society provides for the wants and needs

needs of its people Traditional Economy Economic system in which the allocation of scarce resources and other economic activities are based on ritual, habit, or custom Command Economy Economic system with a central authority that makes the major economic decisions Market Economy Economic system in which supply, demand, and the price system help people make economic decisions and allocate resources Market meeting place or mechanism that allows buyers and sellers to come together Capitalism Economic system in which private citizens own and use the factors of production in order to generate profits. Mixed Economy Economic system that has some combination of traditional, command, and market economies. Socialism Political and economic system in which the government owns and controls some factors of production Communism Economic and Political system in which all factors of production are collectively owned and controlled by the state Minimum Wage lowest legal wage that can be paid to most workers economic equality Social Security Federal program of disability and retirement benefits that covers most working people economic security Inflation rise in the general level of prices Fixed Income Income that does not increase even though prices go up Free Enterprise Capitalistic economy in which competition is allowed to flourish eith a minimum of government interference

Voluntary Exchange the act of buyers and sellers freely and willingly engaging in market transactions benefits both the buyer and the seller Private Property Rights Fundamental feature of capitalism that allows individuals to own and control their possessions as they wish Profit Extent to which persons or organizations are better off financially at the end of a period than they were at the beginning Profit Motive Incentive that encourages people and organizations to improve their financial and material well-being Competition the struggle among sellers to attract consumers Consumer Sovereignty Role of the consumer as ruler of the market when determining the types of goods and services produced. Mixed or Modified Free Enterprise Economy Economy where people carry on their economic affairs freely but are subject to some government intervention and regulation

Kaitlynne Cunningham

November 7, 2011

Chapter 8 Economics Vocabulary Craft Union or Trade Union labor union whose members perform the same kind of work Industrial Union Labor Union whose members perform different kinds of work in the same industry Strike Union-organized work stoppage designed to make and employer meet union demands Picket demonstrate or march before a place of business to protest a companys actions Boycott Refusal to buy products from an employer or company Lockout Management refusal to let employees work until demands are met Company Unions Union organized, supported, or run by the employer Great Depression Worst period of economic decline in US history, lasting from 1929 to approximately 1939 Right to Work Law state law making it illegal to require a worker to join a union Independent Union labor union not affiliated with the AFL-CIO or the Change to Win Coalition Closed Shop Arrangement under which workers must join a union before they are hired Union Shop Arrangement under which workers must join a union after being hired Modified Union Shop Arrangement under which workers have the option to join a union after being hired Agency Shop Arrangement under which nonunion workers must pay union dues Civilian Labor Force Noninstitutionalized part of the population, aged 16 and over, either working or looking for a job Wage Rate Prevailing Pay scale for work performed in an occupation

Unskilled Labor workers not trained to operate specialized machines and equipment Semiskilled Labor Workers who operate machines that require a minimum amount of training Skilled Labor Workers who are trained to operate complex equipment and require little supervision Professional Labor workers with a high level of training, education, and managerial skills Market Theory of Wage Determination Explanation of wage rates relying on theory of supply and demand Equilibrium Wage Rate Wage rate leaving neither a surplus or a shortage in the market Theory of Negotiated Wages Explanation of wage rates based on the bargaining strength of organized labor Seniority length of time a person has been on a job Signaling Theory Theory that employers are willing to pay more for people with certificates, diplomas, and other indicators of superior ability Collective Bargaining Process of negotiation between union and management representatives over pay, benefits, and job-related matters Grievance Procedure Provision in labor contract that outlines how future disputes and disagreements will be resolved Mediation Process of resolving a dispute by bringing in a neutral third party Arbitration or Binding Arbitration Agreement by two parties to place a dispute before a third party for a binding settlement Fact-Finding Agreement between union and management to have a neutral third party collect facts about a dispute and present nonbinding recommendations Injunction Court order issued to prevent a company or union from taking action during a labor dispute

Seizure Temporary government takeover of a company to keep it running during a labor management dispute Giveback Wage, fringe benefit, or work rule given up when negotiating a contract Two-Tier Wage System Wage scale paying newer workers a lower wage than others already on the job Glass Ceiling Seemingly invisible barrier hindering advancement of women and minorities in a male-dominated organization Set-Aside Contract Guaranteed contract reserved for a targeted group, usually a minority Minimum Wage lowest legal wage that can be paid to most workers Current Dollars Dollar amounts or prices that are not adjusted for inflation Real or Constant Dollars Dollar amounts or prices that have been adjusted for inflation Base Year Year serving as point of comparison for other years in a price index or statistical measure