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

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2
Q

production possibilities frontier

A

a graph that shows the combinations of output that the economy can possible produce given the available factors of production and the available production technology

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3
Q

microeconomics

A

the study of how households and firms make decisions an dhow they interact in markets

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4
Q

macroeconomics

A

the study of economy-wide phenomena including inflation, unempolyment, and economic growth

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5
Q

positive statements

A

claims that attempt to describe the world as it is

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6
Q

normative statements

A

claims that attempt to prescribe how the world should be

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