Exam #4 (Economics-101) Flashcards
What is Non-Stationarity?
What used to be normal is not normal anymore.
Because the definition of climate change (Climate 101) involves changes in weather statistics, including both averages and variability (standard deviations), particularly including extremes, non-stationarity is inherent in the very concept of climate change.
The extremes in the climate system of the past can no longer be considered the outer limits of what our current and future climate system can exceed. For example, a 100-year flood could now be expected to happen more frequently than once in a 100-year period, even more often than once in 50 years.
What is Externality?
A cost or benefit caused by a producer that is not financially incurred or received by that producer.
Unpriced activities can be either positive or negative externalities, e.g., social or individual benefits from volunteerism, or individual or societal harm from fossil fuel burning.
What is a Tragedy of the Commons?
A situation in which individuals with access to a public resource (also called a common) act in their own interest and, in doing so, ultimately deplete the resource.
Examples: Overfishing and excessive groundwater use; climate change.
What is
Gross Domestic Product (GDP)?
The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
A key word in this definition is “market,” so that GDP incorporates priced goods, such as real estate or agricultural output, but omits unpriced goods such as ecosystem services, human health, or social inequality. Though strictly defined for whole countries, the term “GDP” often finds use in narrower contexts, e.g., a state or city, or a broader region such as the EU.
What is Economics?
A social science that focuses on the production, distribution, and consumption of goods and services and analyzes the choices that individuals, businesses, governments, and nations make to allocate resources.
Many college students take an introductory course in economics. Some choose to major in the subject.
What is Microeconomics?
A branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.
Example: the study of COVID supply shortages on prices.
What is Macroeconomics?
A branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole.
Example: analysis of the long-term impacts of federal tax cuts on national economic activity.
What is an
Economic System?
A system of production, resource allocation, and distribution of goods and services within a society or a given geographic area.
It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.
What is a Mixed Economy?
An economic system that combines one of three characteristics: public and private ownership of industry, market-based allocation with economic planning, or free markets with state interventionism.
It constrasts with the oversimplified division of economic systems into market economies (where competitive markets determine production and prices) and command economies (where central governments determine investment, production, prices, and income). Today, currently market-oriented mixed economies dominate globally.
What is
Neoclassical Economics?
A broad theory that focuses on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services.
What is
Environmental Economics?
An area of economics dealing with the relationship between the economy and the environment. It adds the environment to the neoclassical economic picture.
What are
Ecosystem Services?
The direct and indirect contributions of ecosystems to human well-being.
Monetizing ecosystem services, such as water suppy or purification, is a method of incorporating them into economic analysis.
This term also appears in GHG 102.
What is
Ecological Economics?
A transdisciplinary effort to link the natural and social sciences broadly, especially ecology and economics.
Its goal is to develop a deeper scientific understanding of the complex linkages between humans and the rest of nature.
What is Tenor?
The time-to-maturity of a loan or other financial contract.
In the context of economic modeling of climate change impacts, it is the timeframe of reference. Some available tools, e.g., from the insurance industry, have tenor too short to provide accurate guidance for climate impacts over longer times.
What is a Discount Rate?
The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.
Because funds invested today generally yield more at a future time, say, 20 years, the same initial amount provided in 20 years holds less value now (“the time value of money”).
What is an
Integrated Assessment Model (IAM)?
A type of scientific model that tries to link main features of society and economy with the biosphere and atmosphere into one modeling framework.
An IAM connects economic drivers with climate consequences and feedbacks from the resulting climate changes and their impacts, including policy changes, into the economy.
