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Down With Dobie > Economics Glossary > Flashcards

Economics Glossary Flashcards

1
Q

Adaption

A

the process of adjusting to actual or expected climate changes to moderate harm

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2
Q

Aggregate demand curve

A

a graphical depiction of the relationship between the level of desired expenditures in an economy and the price level

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3
Q

Aggregate supply curve

A

a graphical depiction of the relationship between the quantity of goods and services firms wish to supply and the price level

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4
Q

Albedo effect

A

the reflection of sunlight from light or white surfaces or particles

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5
Q

Average labor productivity

A

total output divided by the quantity of labor employed in its production

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6
Q

Bank run

A

a sudden rush of depositors seeking to withdraw funds from the banking system

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7
Q

Barriers to entry

A

conditions that prevent firms from freely entering or exiting a market

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8
Q

Beta-delta discounting

A

a split frame or quasi-hyperbolic discount rate in which one rate is applied to nearby decision and another to decision farther out in time

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9
Q

Business cycle

A

fluctuations in aggregate economic activity

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10
Q

Capital

A

one of three factors of production; in classical economics, capital refers to money or physical assets. Plows or mature tree crops may be considered forms of capital in this context

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11
Q

Capital goods

A

long-lived good that are themselves produced and are used to produce other goods and services, but are not used up in the production process

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12
Q

Cartel

A

a group of firms that collude in a given market to restrain competition, often making quota arrangements among themselves

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13
Q

Climate commons

A

the shared atmospheric environment of the globe

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14
Q

Coase Theorem

A

the proposition that if private parties can bargain without cost over the allocation of resources, then they can solve the problem of externalities on their own

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15
Q

Collective action

A

the organization and coordination of multiple agents (including countries) to achieve a common goal

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16
Q

Comparative goods

A

the ability to produce a good or service at a lower opportunity cost than other producers

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17
Q

Competitive market

A

a market with many buyers and sellers trading a homogenous good or service in which each buyer and seller is a price taker

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18
Q

Complements

A

two goods for which a rise in the price of one leads to a decline in the demand for the other

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19
Q

Consumer Price Index (CPI)

A

an index constructed by comparing the cost of purchasing a fixed basket of goods at different times

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20
Q

Consumer surplus

A

the difference between the amount that a buyer would be willing to pay for a good or service and the price actually paid

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21
Q

Consumption

A

spending by households on goods and services, with the exception of the purchase of new housing

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22
Q

Cost-effective

A

achieving a specific goal or objective at least cost

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23
Q

Crowding out

A

the decrease in private investment that occurs as a result of a reduction in government saving or an increase in government borrowing

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24
Q

Currency

A

coins and bills in the hands of the public

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25
Q

Cyclical unemployment

A

unemployment caused by deviations of output from its potential level

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26
Q

Deadweight loss

A

the reduction in total surplus that results from a market distortion such as a tax

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27
Q

Demand curve

A

a graphical representation of the quantity of a good or service demanded as a function of the price

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28
Q

Diminishing returns to scale

A

the property whereby each additional increase in inputs results in a smaller increase in the quantity produced

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29
Q

Discount rate

A

the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank’s lending facility (also called time preference)

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30
Q

Economic house

A

an allegorical household shared by multiple individuals who are obligated to make an effort to keep it clean

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31
Q

Economic profit

A

the difference between the revenue realized by a producer and the opportunity cost of production

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32
Q

Elasticity

A

the percentage change in quantity demanded or supplied as a result of a one percent change in price

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33
Q

Entrepreneur

A

an individual who taken on the risk of attempting to create new products or services, establish new markets, or develop new methods of production

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34
Q

Equilibrium

A

a situation in which the forces in a system are in balance so that the situation is stable and unchanging

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35
Q

Excludable good

A

a good that an individual can prevent another individual from using

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36
Q

Expansion

A

a period between a trough and a peak in economic activity

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37
Q

Experimental governance

A

simultaneous top-down and bottom-up management of global climate governance

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38
Q

Externality

A

when the action of one person affects the well-being of someone else, but where neither party pays nor is paid for these effects

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39
Q

Federal funds rate

A

the rate that banks charge other banks when they lend reserves

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40
Q

Final goods

A

goods or services that are purchased by their ultimate user

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41
Q

Financial markets

A

the institutions through which individuals with saving can supply these funds to persons or firms that wish to borrow money to purchase consumption goods or invest in physical capital

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42
Q

Fiscal policy

A

the use of taxes and spending to influence aggregate demand and through it the level of overall economic activity

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43
Q

Fixed cost

A

a cost of production that is independent of the quantity produced

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44
Q

Foreign district investment

A

when a company or individual acquires assets in a foreign country that they will manage directly

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45
Q

Free driver

A

a person, firm, or country that assumes control and acts to influence a larger group without authorization by “grabbing the wheel”

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46
Q

Free rider

A

a person, firm, or country that consumes a public good but pays less or none of the cost of its provision

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47
Q

Frictional unemployment

A

unemployment that results because it takes time for workers to search for the jobs that are best suited to their tastes and skills

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48
Q

Gains from trade

A

the benefits that both individuals or nations realize from mutually beneficial exchange

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49
Q

Geoengineering

A

deliberate large-scale intervention in the Earth’s natural systems in an effort to counteract climate change (such as particulate matter into the atmosphere to reduce global mean temperatue)

50
Q

Government purchases

A

spending on goods and services by federal, state, and local governments

51
Q

Gross Domestic Product (GDP)

A

the market value of final goods and services produced in an economy during a specified period of time

52
Q

GDP per capita

A

estimate of national output divided by population; gives an average level of income per person

53
Q

Human capital

A

skills and experience that increase a worker’s productivity

54
Q

Imperfect competition

A

the case of a market with a small number of sellers, so that sellers have market power

55
Q

Inferior good

A

a good for which the quantity demanded falls as buyers’ income increases

56
Q

Institutions

A

the “rules of the game” in society, which shape the costs and benefits of economic decisions

57
Q

Intermediary

A

a third party who acts as a link between two others who wish to transact business

58
Q

Intermediate good

A

a good or service that is used in the process of producing other goods and services

59
Q

Investment

A

spending on capital equipment, inventories, and structures, including household purchases of new housing

60
Q

Keynesian Model

A

a model of short-run aggregate economic fluctuation inspired by John Maynard Keynes, which attributes short-run deviations in output from potential to variations in the level of aggregate demand or aggregate supply

61
Q

Labor force

A

the sum of those individuals who are employed and those who are seeking paid work but have not found it

62
Q

Labor force participation rate

A

the fraction of the working-age population who are in the labor force

63
Q

Law of demand

A

the quantity demanded is negatively related to the price (inverse relationship)

64
Q

Law of supply

A

the quantity supplied is positively related to the price

65
Q

Liquidity

A

the ease with which a nonmonetary asset may be converted into money

66
Q

Logrolling

A

the practice of elected officials trading votes

67
Q

Marginal cost

A

the additional cost of production associated with a small increase in the quantity produced

68
Q

Marginal revenue

A

the additional revenue resulting from a small increase in the quantity produced

69
Q

Market failure

A

any situation in which a market does not allocate goods and services efficiently

70
Q

Monetary base

A

the quantity of currency plus bank reserves

71
Q

Monetary policy

A

the use of the supply of money in the economy by the Federal Reserve to influence the level of aggregate deamnd

72
Q

Money

A

an asset that is a medium of exchange, unit of account, and store of value

73
Q

Money multiplier

A

the ratio of the money supply to the monetary base

74
Q

Money supply

A

the quantity of money available to the economy

75
Q

Monopolistic competition

A

a market in which there is free entry or exit, but every producer supplies a differentiated product and faces a downward-sloping demand curve

76
Q

Monopoly

A

a market in which there is a single producer

77
Q

Natural rate of unemployment

A

the level of unemployment that would exist if the economy were producing at its potential output

78
Q

Negative externalities

A

costs imposed on other agents that are not captured by market prices

79
Q

Nested public goods

A

one public good or commons dilemma inside another (like Russian dolls)

80
Q

Net capital outflow

A

the difference between the value of goods and services sold to foreigners and the value of goods and services purchased from foreigners

81
Q

Neutrality of money

A

the proposition that in the long run, changes in the quantity of money affect the price level but do not affect any real quantities

82
Q

Nominal GDP

A

the production of goods and services valued at current prices

83
Q

Nonrivalry

A

The consumption of a good or service of one takes away from another’s

84
Q

Normal good

A

a good or service for which demand is positively related to the buyer’s income

85
Q

Normative economics

A

economic analysis used to guide decision about what should be as opposed to what is the case

86
Q

No regrets

A

describes a policy that seeks to accomplish environmental objectives that are aimed at the worst-case outcome and that will be beneficial even if less worse outcomes occur

87
Q

Oikos

A

Greek word meaning household and its management

88
Q

Okun’s Law

A

1% decrease in cyclical employment leads to a 2% decrease in the potential output

89
Q

Oligopoly

A

a market in which there are just a few producers

90
Q

One-way (undirectional) externalities

A

externalities that go from one agent to another buy not both way

91
Q

Open market operations

A

a tool used by the Federal Reserve to adjust the money supply by buying or selling U.S. government bonds in the financial market

92
Q

Opportunity cost

A

the cost of any choice is what must be given up by making that choice

93
Q

Output gap

A

the difference between actual output and potential output

94
Q

Pareto efficiency

A

describes an allocation in which the only way to make an individual or group of individuals better off would require making at least one other person worse off

95
Q

Portfolio investment

A

the purchase of shares of stocks or bonds

96
Q

Positive economics

A

the use of the tools of economic analysis to describe and explain economic phenomena and to make predictions about what will happen under particular circumstances

97
Q

Positive externalities

A

benefits to other agents that are not captured by market prices

98
Q

Potential output

A

the quantity of output that would be produced by an economy if all of its resources were being employed at normal rates

99
Q

Price discrimination

A

when a business sells the same product to different buyers at different prices

100
Q

Price elasticity of demand

A

the amount by which demand for a given product changes in price (percentage change in demand that corresponds to a one percent change in price)

101
Q

Principal/agent problem

A

the information and monitoring problems faced by a principal seeking a good and their marginal cost of producing it

102
Q

Production Possibility Frontier (PPF)

A

a graphical depiction of the combinations of output that can be produced by an economy

103
Q

Public goods

A

a good or service for which it is not possible to establish property rights (nonrival and nonexcludable)

104
Q

Real GDP

A

the production of good sand services valued at prices adjusted for inflation

105
Q

Reciprocal externalities

A

externalities that go from one agent to another and vice verse

106
Q

Rent seeking

A

using political influence to increase one’s economic profits at the expense of others

107
Q

Reserve requirement

A

the amount of reserves that the Fedral Reserve requires banks to hold

108
Q

Reserves

A

the fraction of deposit liabilities that banks hold to meet depositor withdrawals

109
Q

Savings

A

the difference between a person’s disposable income and their expenditures

110
Q

Social cost of carbon (SCC)

A

the cost, in dollars, of the damge done by each additional ton of carbon emissions

111
Q

Structural unemployment

A

unemployment that results from the mismatch in skills, locations, or other important characteristics between job seekers and the available jobs

112
Q

Substitutes

A

two good for which an increase in the price of one leads to an increase in the demand for the other

113
Q

Supply curve

A

a graphical representation of the quantity of a good or service supplied as a fraction of the price

114
Q

Time preference

A

the relative weight or value given to future or past consumption compared to present consumption

115
Q

Total surplus

A

the sum of consumer and producer surplus

116
Q

Tragedy of the Commons

A

the depletion of a common resource because each agent has an incentive to overexploit it

117
Q

Unemployment

A

the state of actively seeking paid work but unable to find it (for at most four weeks)

118
Q

Unemployment rate

A

the number of unemployed workers as a fraction of the total labor force

119
Q

Variable cost

A

a cost of production that depends on the quantity produced

120
Q

Velocity of money

A

the ratio of nominal GDP to the money supply; in effect, the average number of transactions supported by each dollar of the money supply

121
Q

Wealth

A

the total value of assets used as a store of value

Down With Dobie (21 decks)

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