Economic Conditions | Social Studies
When you watch the news or read news articles, you’ll come across discussions on the state of the economy. What do these discussions mean?
Let’s review important economic terms and discover what an economic condition is in preparation for the TASC Test Assessing Secondary Completion™ Social Studies subtest.
What is an economy?
By definition, a country’s economy is the wealth and resources it possesses, especially in terms of the production and consumption of goods and services.
According to InvestopediaTM, economies affect individuals, corporations, and governments, and are controlled by a country’s geography, history, laws, culture, and other factors. Because so many circumstances influence a country’s economy, no two economies are the same.
What is an economic condition?
The experts at Investopedia explain that “economic conditions are the state of the economy in a country or region.” Economies go through expansions and contractions over time, and are influenced by various macroeconomic and microeconomic factors. Such factors that determine the state of a country’s economy include, but are not limited to:
- Currency and tax policies
- State of the global economy
- Unemployment and inflation rates
- Exchange rates
When an economy is expanding, economic conditions are positive and the state of the economy is considered good or strong.
When an economy is contracting, economic conditions are negative and the state of the economy is considered poor or weak.
Important Economic Terms
These terms will help you understand and interpret economic conditions, as well as help you understand financial decisions you may need to make in your life.
- An interest rate is the portion of a loan that is charged to the borrower for the use of money lent. It can be thought of as the price of borrowing money or the return for lending money.
- Scarcity is when something is in short supply, or there is a shortage of a particular good or service.
- Sunk cost is a cost that cannot be recovered by any means.
- Inflation is the increase of prices and the fall in the purchasing value of money.
- Cost-benefit analysis is a process that weighs both the pros and cons of a purchase. If benefits outweigh the costs, a purchase makes economic sense.
Current Economic Conditions in the United States
How can you keep up with our nation’s current economic state? Typically, economic data is released quite frequently – depending on which source(s) you’re following. Reliable sources to read include:
- The Bureau of Labor Statistics’ Economy at a Glance
- The U.S. Department of Commerce Bureau of Economic Analysis
- The U.S. Economic Snapshot
Watch this helpful video on economic indicators from Investopedia to take your economic studies further.