Chapter Two: Thinking Like an Economist Flashcards
1
Q
Circular Flow Diagram
A
A visual model of the economy that shows how dollars flow through markets
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
