Chapter 2 Flashcards
1
Q
circular flow diagram
A
a visual model of the economy that shows how dollars flow through markets among households and firms
2
Q
production possibilities frontier
A
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
3
Q
microeconomics
A
the study of how households and firms make decisions and how they interact in markets
4
Q
macroeconomics
A
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
5
Q
positive statements
A
claims that attempt to describe the world as it is
6
Q
normative statements
A
claims that attempt to prescribe how the world should be
