ADE 4 Flashcards
Nominal variables
variables measured in monetary units
Normative statements
Claims that attempt to prescribe how the world should be
Open economy
An economy that interacts freely with other economies around the world
Open-market operations
the purchase and sale of non-monetary assets from and to the baking sector by the central bank
Opportunity cost
whatever must be given up to obtain some item-the value of the benefits foregone
Phillips curve
a curve that shows the short-run trade-off between inflation and unemployment
Physical capital
the stock of equipment and structures that are used to produce goods and services
Positive statements
claims that attempt to describe the world as it is
Poverty rate
the percentage of the population whose family income falls below an absolute level called the poverty line
Price discrimination
the business practice of selling the same good at different prices to different customers
Price level
the price of a basket of goods and services measured as the weighted arithmetic average of current prices
Private saving
the income that households have left after paying for taxes and consumption
producer surplus
the amount a seller is paid for a good minus the seller’s cost
Production function
the relationship between quantity of inputs used to make a good and the quantity of output of that good
Production possibilities frontier
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production technology
