14-15 Economics Set 3 (M-O) Flashcards
additional cost of production associated with a small increase in the quantity produced
marginal cost
additional revenue resulting from a small increase in the quantity produced
marginal revenue
any situation in which a market does not do what market theorists believe it should
market failure
quantity of currency plus bank reserves
monetary base
situation in which one firm, or a group of them acting as a cartel, can control prices in a market, often by restricting output
market power
ratio of the money supply to the monetary base
money multiplier
quantity of money available to the economy
money supply
a market in which there is free entry or exit, but every producer supplies a differentiated product and faces a downward sloping demand curve
monopolistic competition
a market in which there is a single producer
monopoly
a firm operating in an industry where there may be large initial capital costs, but after that, a very small additional cost of expansion, with large economies of scale; in such situations, a single firm may be the efficient solution
natural monopoly
level of unemployment that would exist if the economy were producing at its potential output
natural rate of unemployment
the difference between the purchases of foreign assets by domestic residents and the purchases of domestic assets by foreign residents
net capital outflow
the proposition that in the long run, changes in the quantity of money affects the price level but do not affect any real quantities
neutrality of money
the production of goods and services valued at current prices
nominal GDP
a good or service for which demand is positively related to the buyer’s income
normal good
economic analysis used to guide decisions about what should be as opposed to what is the case
normative economics
relationship identified by Arthur Okun between the output gap and the level of cyclical unemployment
Okun’s law
a market in which there are just a few producers
oligopoly
a tool used by the Federal Reserve to adjust the money supply by buying or selling U. S. government bonds in the financial market
open market operations
the cost of any choice is what must be given up by making that choice
opportunity cost
the difference between actual output and potential output
output gap
