A major goal of an economic system is to achieve economic growth.
The market basket is the inflated price consumers usually pay for the same goods and services over time.
For example:
In 1982, a family of four probably spent the following amount monthly:
$475 groceries
$ 80 electricity
$ 50 entertainment
$605 total
However, 40 years later, the cost of living will rise to meet the increased cost of goods and services.
In 2022, that same family could more than likely spend the following amount monthly:
$640 groceries
$285 electricity
$125 entertainment
$1,050 total
Keep in mind that these prices do not reflect an actual model. They are just used to demonstrate the rise, in this case, or the possible fall of prices over 40 years.
The purpose of the market basket is to help economists calculate the Consumer Price Index on goods and services and establish the cost of living.
Additional Facts:
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more products and services than consumers need
when the consumer need is greater than the amount available
surplus
shortage
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the desire and ability to pay for goods and services
demand
when the supply and demand are equal and their curve lines intersect
the amount of goods and services available to be sold
equilibrium
supply
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a rise in the price of goods and services
inflation
a decrease in the price of goods and services
the total amount of goods and services produced within a country's borders over a specified time
deflation
Gross Domestic Product
(GDP)
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the total amount of goods and services produced by a nation's citizens, domestic and abroad, over a specified time
Gross National Product
(GNP)
the measure of change in prices that an average consumer would pay for a market basket of goods and services over time
a person who purchases goods and services for personal use
Consumer Price Index
(CPI)
consumer
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the amount of money that goes towards personal spending for goods and services
consumer spending
the ratio that compares the amount of output per unit with the amount of input used in the production of goods and services
a financial market where stock is bought or sold through exchange
productivity
stock market
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a piece of ownership of a corporation's capital
stock
a business that sells goods to a consumer
a business that buys large quantities of goods and resells them to retailers to be sold to consumers
retailer
wholesalers
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a business that produces or makes goods to be sold to consumers
manufacturers
distributing a limited amount of resources
rationing
Social Studies: Supply and Demand - Flashcards
Use the flashcards to help you memorize the following terms and definitions. Then try the worksheets shown on the Social Studies Homepage. Once you are ready to quiz yourself, click the Quiz link.
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