Chapter 2 Flashcards

1
Q

What is the role of the economist

A

Economists play two main roles: as scientists and as policymakers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

explain the role of an economist as a scientist

A

As scientists, economists develop models to explain economic behavior and predict outcomes. They use these models to analyze data, test hypotheses, and understand economic trends.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

explain the role of an econmist as a policymaker

A

As policymakers, they use their scientific knowledge to advise on economic policy decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the scientific method

A

The scientific method involves making observations, forming theories, and testing hypotheses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How do the economist use the scientific method

A

Economists use this method to develop economic theories and test their validity. This process includes:

Observations: Noticing patterns and collecting data.

Theories: Developing explanations for observed phenomena.

Testing: Using data and experiments to validate or refute theories.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the role of assumptions

A

Assumptions simplify complex realities to make models manageable and useful.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How do economist use assumptions

A

Economists use assumptions to build models that abstract from the complexities of the real world. These assumptions are essential for developing clear and testable models.

Example: Assuming that people act rationally in economic models to simplify analysis.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is positive economics

A

Describes and explains economic phenomena based on factual evidence. It answers questions about how the world works.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is normative economics

A

Involves value judgments about what ought to be. It addresses questions about what should happen based on ethical considerations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Provide an example of positive and normative economics

A

A positive economic question might be, “What is the impact of a minimum wage increase on unemployment?” A normative question might be, “Should the government raise the minimum wage?”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the role of the economic models in policy

A

Models help evaluate policy options and predict outcomes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How do economists use models

A

Economists use models to analyze the effects of different policies, providing insights into potential consequences and guiding decision-making.

Example: Using a supply and demand model to evaluate the effects of imposing a price ceiling on goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are models

A

Models are simplified representations of reality.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Why do economists construct models

A

Economists construct models to focus on specific aspects of the economy. These models use diagrams and mathematical equations to represent economic relationships and predict outcomes.

Example: The supply and demand model illustrates how prices are determined in a market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the circular flow diagram

A

The Circular-Flow Diagram shows how money flows through the economy.

Description: This model illustrates the interactions between households and firms in two main markets:

The Goods and Services Market: Where firms sell goods and services to households.

The Factors of Production Market: Where households sell labor, capital, and land to firms.

Example: Households provide labor to firms, which in turn produce goods and services that households purchase.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the production possibilities frontier (PPF)

A

The PPF shows the trade-offs between two goods.

The PPF illustrates the maximum possible production of two goods given available resources. It helps visualize opportunity costs and the concept of efficiency.

Example: A PPF might show the trade-off between producing more guns or more butter in an economy.

17
Q

Microeconmics and macroeconomics are

A

Microeconomics and macroeconomics are two branches of economics that focus on different levels of analysis.

18
Q

What is Microeconomics

A

Microeconomics: Examines individual and firm-level decision-making and market outcomes.

Microeconomics might explore how a tax affects the price of a product

19
Q

What is Macroeconomics

A

Macroeconomics: Studies economy-wide phenomena like inflation, unemployment, and economic growth.

macroeconomics might analyze the causes of a national recession.

20
Q

what is the interconnection betwee Micro and Macro Economics

A

Microeconomic behaviors aggregate to macroeconomic outcomes.
Description: Individual decisions and market dynamics contribute to broader economic trends. Understanding microeconomics is essential for analyzing macroeconomic issues.
Example: Aggregate consumer spending (a microeconomic concept) affects overall economic growth (a macroeconomic concept).

21
Q

Why is Economic literacy important

A

conomic literacy helps individuals make informed decisions.
Description: Understanding economic principles empowers people to engage in discussions about policy and make informed choices in their personal and professional lives.
Example: Knowledge of supply and demand helps consumers make better purchasing decisions.

22
Q

Define Positive Economics

A

The branch of economics that deals with objective analysis of economic phenomena.

23
Q

Define Normative economics

A

The branch of economics that involves value judgments and opinions about what ought to be.

24
Q

Define the circular -flow diagram

A

A model showing the flow of goods, services, and money between households and firms.

25
Define the Production possiblities frontier
A graph showing the trade-offs between two goods that an economy can produce.
26
Define Microeconomics
The study of individual and firm-level economic behavior.
27
Define Macroeconmics
The study of economy-wide phenomena and issues.
28
Circular-flow diagram
a visual model of the economy that shows how dollars flow through markets among households and firms
29
Production possibilities frontier
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
30
Microeconomics
the study of how households and firms make decisions and how they interact in markets
31
Macroeconomics
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
32
Positive statements
claims that attempt to describe the world as it is
33
Normative statements
claims that attempt to prescribe how the world should be
34