Econ-Chapter 3 Flashcards
What is true about money?
It only makes transactions easier and stores value.
Dollars keep track of what
Economic activity
How is value created?
Through production and through trade
Production process
Turns inputs into consumable outputs
Consumable Outputs
Are goods and services
Resources/inputs
Natural Resources/ Land
Labor
Capital
Entrepreneurship
To make an iPhone it takes a huge economic engine, connected by the price system that conveys..
the necessary information about the scarcity of each resource , the preferences of consumers, and provides incentives for working together.
Technology
The way that inputs are combined to produce output
Make Work Fallacy
The idea that jobs are valuable, wether or not the labor’s production adds value.
As resources are released from producing one good, they become available to produce others, which makes us..
wealthier
Production Possibilities Frontier (PPF) assumes three things:
Only two goods are produced over some time period
Some fixed amount of resources is used
A given technology is used
Law of Increasing Opportunity Cost (LIOC)
As more of one good is produced, the opportunity cost of producing a unit of that good rises, in terms of theater good which must be sacrificed.
The PPF only shows
Possibilities
Wealth is about
Having valuable stuff.
Authoritarian Economy
Decisions will reflect the values of those taking part in the economy.
Market Economy
All choices are based on value
Human Capital
Individuals upgrade their labor by education and training.
Income and Wealth depend on these three things:
Quantity of resources
Quality of resources
Freedom to use those resources
Those who can provide value..
are able to consume some of that value
Those who cannot provide as much value have ..
Less to consume
Invisible hand
To promote an end which was no part of his intentions, used by Adam Smith
Economic Growth
An expansion of an economy’s productive capabilities .
