Foundations of Economics Flashcards
The economic relationships that exist between different economic groups in an economy
Circular Flow of Economic Activity
The willingness and the ability of buyers to purchase different quantities of a good at different prices during a specific time period
Demand
The social science that studies the choices of people trying to satisfy their wants in a world of scarcity
Economics
The way in which a society decides what goods to produce, how to produce them, and for whom goods will be produced
Economic System
An economic system in which individuals (not government) own most, if not all, the resources and control their use. Government plays only a small part in the economy.
Free enterprise (market economy)
A phenomenon by which economic agents in any given part of the world are affected by events elsewhere in the world; the growing integration of the national economies of the world to the degree that we may be witnessing the emergence and operation of a single worldwide economy.
Globalization
The total market value of all final goods and services produced annually in a country
Gross Domestic Product (GDP)
The most highly valued opportunity or alternative forfeited when a choice is made
Opportunity Cost
A graphic representation of all possible combinations of two goods that an economy can produce
Production Possibilities Frontier (PPF)
Anything that is used to produce goods or services (land, labor, capital). For example, a person’s labor may be used to produce computers, TV sets, and much more, and therefore a person’s labor is a resource.
Resource
The condition in which our wants are greater than the resources available to satisfy those wants.
Scarcity
An economic system in which government controls and may own many of the resources
Socialism (Command Economy)
The willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a time period
Supply
A situation in which more of one thing necessarily means less of something else (choice)
Trade-off
An economic system in which the answers to the three economic questions are based on customs, traditions, and cultural beliefs
Traditional Economy
