Chapter 2 - Thinking Like an Economist Flashcards
1
Q
Microeconomics
A
The study of how households and firms make decisions and how they interact in markets
2
Q
Positive statements
A
Claims that attempt to describe the world AS IT IS
3
Q
Macroeconomics
A
The study of economy-wide phenomena, including inflation, unemployment, and economic growth
4
Q
Normative statements
A
Claims that attempt to prescribe how the world SHOULD BE
5
Q
Circular-flow diagram
A
A visual model of the economy that shows how dollars flow through markets among households and firms
6
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 availed production technology
