Chapter 1 Review Flashcards
Circular flow diagram
Households receive goods and services from firms and then households pay the firm.
In labour markets households provide labour and firms pay households for the labour.
Command economy
The government controls what comes in or out of the country and controls its resources. Command economies are very centralized and a market economy is where decision are decentralized
Division of labour
When workers divide tasks up to produce a good or service. The more division of labour you have the higher productivity will be , because of specialization and economies of scale
Economies
Study of how humans make choices under pressure of scarcity .
Economies of scale
The amount it costs to produce an individual unit, declines as total output increases.
Exports
A country sells a product or good to another country.
Fiscal policy
Policy on how governments spend money on resources and collect taxes.
Globalization
When country’s expand politically, culturally. The economic connection between people around the world.
Goods and services market
When firms buy stuff from other firms but almost when firms are sellers and households are buyers.
Imports
A country buys a good or service in which this good or service was made in a foreign country.
Labor market
Households sell their labor to firms and firms pay households for that labour.
Macroeconomic
Broader look in economics in which it looks at growth,inflation and unemployment and trade balance.
Inflation
When an average price of a product in the economy slowly increases
Market
Interaction between buyers and sells and also the relationship between demand and supply
Market economy
Canada is considered a market economy. When economic decisions are decentralized, private individuals own resources and business sells goods and services based on demand.
Microeconomics
Area of economics where it focus on business firms, households and workers. They basically focus specific areas in economics.
Monetary policy
A policy that alters levels of interest rates, availability of credit in the economy and altering the extent of borrowing
Private enterprise
Private groups or individuals own and operate means of production. Government owned businesses in which they are called crown corperations
Scarcity
When the human wants exceed the given supply of goods and services.
Specialization
When workers or firms focus on an individual task in which they are well suited for, in the production process.
Theory
Representation of an object or situation in which they simplify but still include important features of it to explain the concept.
Traditional economy
An economy in which things have always been the same and don’t change. The individuals often have social bonds and there is also barter and direct trade.
Underground economy
Buyers and sellers make transactions basically under the table or they try to avoid government regulations.
