Economic Vocab

Warm Up # 31 What gives something values? Why are some things worth millions of dollars while others are worth pennies?

Getting the info Trickle Down Stocks Laissez Faire .Buying on Margin Speculation Supply and Demand

Trickle Down Economics Define If government provides business and wealthy individuals with significant tax cuts, they can reinvest that money in the economy and the prosperity will eventually make its way down to the working class. Example Give tax breaks to Walmart, they can hire more people and it has “trickled down”

Stocks Define Example A share of a corporation or business You can purchase stocks in any publicly traded company, this means you own a portion of that company. If the company makes money, your stock increases in value. If the company loses money, your stock decreases in value. You only see the increase or decrease when you sell your stock.

Laissez Faire Define Example Economic policy that government should interfere as little as possible in the nation’s economy (“hands off”) Example If inflation happens – the government doesn’t need to get involved, the market will correct itself

Buying on Margin Define Example Investors make a small cash down payment, then borrow the rest from their stock broker. If stocks increase in value, the investor has the potential to earn a lot. If the stocks decrease, the investor is in debt to their broker. Example Decide to buy a hot dog cart, borrow money from mom and dad…

Speculation Define Example Risky investing, a form of “playing the market” – buying stocks with the hope of selling at a higher price, not necessarily buying because the business is a sound investment Example A form of gambling – betting it’s going to go higher and trying to pull out your money just before it drops

Supply and Demand Define Example Demand: quantity of a product/service that is desired by buyers. Supply: quantity of a product/service that suppliers are willing to provide to buyers at a given price Example How much gas will you buy at $1/gallon vs. $5/gallon? How much will suppliers supply at $1/gallon vs. $5/gallon?