A Flashcards
All the economics terms that start with A
Allocative Efficiency
when the mix of goods produced represents the mix that society most desires
Average Total Cost
total cost divided by the quantity of output
Average Variable Cost
variable cost divided by the quantity of output
Allocative Efficiency
producing the optimal quantity of some output; the quantity where the marginal benefit to society of one more unit just equals the marginal cost
Acquisition
when one firm purchases another
Antitrust Laws
laws that give government the power to block certain mergers, and even in some cases to break up large firms into smaller ones
Additional External Cost
additional costs incurred by third parties outside the production process when a unit of output is produced
Affirmative Action
active efforts by government or businesses that give special rights to minorities in hiring, promotion, or access to education to make up for past discrimination
Adverse Selection
when groups with inherently higher risks than the average person seek out insurance, thus straining the insurance system
Actual Rate of Return
the total rate of return, including capital gains and interest paid on an investment at the end of a time period
Asymmetric Information
a situation where the seller or the buyer has more information than the other regarding the quality of the item for sale
Aggregate Production Function
the process whereby an economy as a whole turns economic inputs such as human capital, physical capital, and technology into output measured as GDP per capita
Adverse Selection of Wage Cuts Argument
if employers reduce wages for all workers, the best will leave
Adjustable-Rate Mortgage
a loan a borrower uses to purchase a home in which the interest rate varies with market interest rates
Aggregate Demand (AD)
the amount of total spending on domestic goods and services in an economy
Aggregate Demand (AD) Curve
the total spending on domestic goods and services at each price level
Aggregate Demand/Aggregate Supply Model
a model that shows what determines total supply or total demand for the economy, and how total demand and total supply interact at the macroeconomic level
Aggregate Supply (AS)
the total quantity of output (i.e. real GDP) firms will produce and sell
Aggregate Supply (AS) Curve
the total quantity of output (i.e. real GDP) that firms will produce and sell at each price level
Adaptive Expectations
the theory that people look at past experience and gradually adapt their beliefs and behavior as circumstances change
Ample Reserves
when banks are holding an amount of reserves significantly above the minimum required amount; generally a choice made by banks during and after the Great Recession
Asset–Liability Time Mismatch
customers can withdraw a bank’s liabilities in the short term while customers repay its assets in the long term
Appreciating
when a currency is worth more in terms of other currencies; also called “strengthening”
Arbitrage
the process of buying a good and selling goods across borders to take advantage of international price differences
Automatic Stabilizers
tax and spending rules that have the effect of slowing down the rate of decrease in aggregate demand when the economy slows down and restraining aggregate demand when the economy speeds up, without any additional change in legislation
Absolute Advantage
when one country has more resources, more productive resources, or a natural endowment to produce a good compared to another country; when a country can produce more of a good compared to another country
Anti-Dumping Laws
laws that block imports sold below the cost of production and impose tariffs that would increase the price of these imports to reflect their cost of production
