Chapter 1 Flashcards
What is monetary policy
A policy that involves altering the level of interest rates, the availability of credit in the economy, and the extent of borrowing
Fiscal Policy
Economic policies that involve government spending and taxes
Private enterprise
A system where the means of production (Resources and businesses) are owned and operated by private individuals or groups of private individuals
Scarcity
When human wants exceed the available supply
Specialisation
When workers or firms focus on particular tasks which they’re well-suited within the overall production process
Theory
A representation of an object or situation that is simplified while including enough of the key features to help us understand the object or situation
Microeconomics
The branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms
Circular flow diagram
A diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market
Exports
Products made domestically and sold abroad
Globalisation
The trend in which buying and selling in markets has increasingly crossed national borders
Good and services market
A market where firms are sellers of what they produce and households are buyers
(GPD) Gross Domestic Product
The measure of the size of total production in economy
Imports
Products made abroad and sold domestically
Labor market
The market where households sell their labor as workers to business firms or other employers
Macroeconomics
The branch of economy that focuses on broad issues like growth, unemployment, inflation, and trade balance
