Chapter 1 Economic Problem Flashcards
Limited nature of resources?
Scarcity
Three types of Economic Resources
Natural, Capital and Human
Types of Economics?
Micro and Macro
Includes raw materials such as minerals and forests and not only land
Natural Resources
basic items that are used in all types of production
Economic resources
Human effort employed directly in production
Labour
is the initiative, risk-taking, and innovation necessary for production
entrepreneurship
the processed materials, equipment, and buildings used in production
Capital
When a natural resource is employed, its owner receives a ____, which is a payment for supplying the resource
rent
The study of how to distribute limited resources to make choice
Economics
the behaviour of individual participants in various markets.
Microeconomics
the branch of economics that takes a wide-ranging view of the economy, studying the behaviour of economic sectors
macroeconomics
generalizations about or simplifications of economic reality; also known as laws, principles, or theories
economic models
allows economists to see the forest instead of the trees.
a good economic model
factors that have measurable values
variable
the variable in a causal relationship that causes change in another variable
independent variable
the variable in a causal relationship that is affected by another variable
dependent variable
An increase in cell phone prices that reduces the number of phones sold is an example of what kind of relationship
inverse relationship
a change in the independent variable causes a change in the same direction of the dependent variable
direct relationship
the assumption all other things remaining the same
ceteris paribus
two types of economic inquiry??
positive and normative economics
normative economics is also called?
policy economics
the study of how the economy ought to operate
normative economics
other term for positive economics?
descriptive economics
It is based purely on economic facts rather than on opinions
Positive economics
the study of economic facts and why the economy operates as it does
positive economics
include causal relationships between variables and are based on simplifying assumptions.
Economic models
it highlights variables such as unemployment, inflation, and total output
Macroeconomics
employing scarce resources in a way that derives the highest benefit
economic efficiency
is an important national goal because it helps to raise the average standard of living for Canadians
Economic growth
a summary of all transactions between Canadians and foreigners that involve exchanging Canadian dollars for other currencies
balance-of-payments accounts
how many countries have signed the Kyoto protocol in 1997, that is an attempt that have been made by countries globally to deal with climate change
170
Every country must answer three basic economic questions
what to produce, how to produce, and for whom to produce.
rely on private property and the operation of markets
Market economies
depend on publicly owned property and central planning.
Command economies
7 main goals of Canadian economy?
economic efficiency, income equity, price stability, full employment, a viable balance of payments, economic growth, and environmental sustainability
the organization of an economy, which represents a country’s distinct set of social customs, political institutions, and economic practices
economic system
an economic system in which economic decisions are made on the basis of custom
traditional economy
individuals are free to pursue their own self-interest.
Market economy
an economic system based on private ownership and the use of markets in economic decision-making
market economy
a set of arrangements between buyers and sellers of a certain item
market
markets in which consumer products are traded
product markets
markets in which economic resources are traded
Resource markets
the effect of consumer needs and wants on production decisions
consumer sovereignty
Placing markets at the centre of economic activity can have benefits. The main benefits are associated with??
consumer sovereignty and innovation
The main drawbacks of a market economy are associated with…
income distribution, possible market problems, and potential instability
Opposite to a market economy
Command Economy
an economic system based on public ownership and central planning
command economy
is the kind of economy in which all productive property—natural resources and capital—is in the hands of government, and markets are largely replaced by central planning.
command economy
The reliance on planning rather than markets gives command economies some possible benefits related to… ?
income distribution and economic growth.
Command economies also have serious drawbacks related to… ?
planning, efficiency, and individual freedom.
an economic system that combines aspects of a market economy and a command economy; production decisions are made both in private markets and by government
modern mixed economy
economic systems in which a traditional sector co-exists with modern sectors
traditional mixed economies
