(2) Thinking like an economist Flashcards
1
Q
a visual model of the economy that shows how dollars flow through markets among households and firms
A
circular-flow diagram
2
Q
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
A
production possibilities frontier
3
Q
the study of how house-holds and firms make decisions and how they interact in markets
A
microeconomics
4
Q
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
A
macroeconomics
5
Q
claims that attempt to describe the world as it is
A
positive statements
6
Q
claims that attempt to prescribe how the world should be
A
normative statements
