Chapter 2 Key Concepts 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 with the available factors of production and 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
Clams that attempt to prescribe how the world should be
7
Q
Normative statements
A
Clams that attempt to prescribe how the world should be
