ECON 2105 Flashcards
Macroeconomics
business cycle
fluctuations in economic activity, such as employment and production
economics
the study of how society manages its scarce resources
efficiency
the property of society getting the most it can from its scarce resources
equality
the property of distributing economic prosperity uniformly among the members
of society
externality
the impact of one person’s actions on the well-being of a bystander
incentive
something that induces a person to act
inflation
an increase in the overall level of prices in the economy
marginal change
a small incremental adjustment to a plan of action
market economy
an economy that allocates resources through the decentralized decisions of
many firms and households as they interact in markets for goods and services
market failure
a situation in which a market left on its own fails to allocate resources
efficiently
market power
the ability of a single economic actor (or small group of actors) to have a
substantial influence on market prices
opportunity cost
whatever must be given up to obtain some item
productivity
the quantity of goods and services produced from each unit of labor input
property rights
the ability of an individual to own and exercise control over scarce resources
rational people
people who systematically and purposefully do the best they can to achieve
their objectives
scarcity
the limited nature of society’s resources
circular flow diagram
a visual model of the economy that shows how dollars flow through markets
among households and firms
macroeconomics
the study of economy wide phenomena, including inflation, unemployment, and
economic growth
microeconomics
the study of how households and firms make decisions and how they interact in
markets
normative statements
claims that attempt to prescribe how the world should be
positive statements
claims that attempt to describe the world as it is
production possibilities frontier
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
absolute advantage
the ability to produce a good using fewer inputs than another producer
comparative advantage
the ability to produce a good at a lower opportunity cost than another
producer
exports
goods produced domestically and sold abroad
imports
goods produced abroad and sold domestically
competitive market
a market in which there are many buyers and many sellers so that each has a
negligible impact on the market price
