Glossary EC Flashcards
(119 cards)
Business cycle
The naturally varying cycle of economic growth, which can rise or fall over time, is measured as the growth of real GDP.
Thinkers: Schumpeter and Fisher.
Ceteris Paribus
A standard assumption in positive economics that is usually translated as ‘all else being equal’. In measuring the effect of one variable on another, all other variables are kept constant.
Thinkers: Marshall
Command system
A system in which the government or state decides the quantity, types, and prices of the goods being produced. It is usually considered one of the main characteristics of a communist economy, in which the central planner replaces the price mechanism of the market system.
Consumption
The act of consuming of a good or service with the aim of satisfying human wants.
Thinkers: Smith and Marshall
Custom system
A system in which society is organized around tradition and habits. Custom introduces elements of regularity, predictability, and conformity into social relationships.
Factor of production
A factor of production is an input that is used in the production of goods or services. The factors of production include labor, land, and capital. The price of labor is wage, the price of land is rent, and the price of capital is the interest rate, which is equal to the opportunity cost of using capital. In more modern theories entrepreneurship or ‘human capital is added as a fourth factor of production.
Fiscal policy
The use of taxation and expenditure policies by the government to regulate and stimulate economic activity.
Thinkers: Keynes
Inflation
The rate at which prices in a market rise and the purchasing power falls.
Thinkers: Fisher
Market system
The third way of organizing economic society, besides custom and command. The market system is a decentralized economic system in which firms and consumers pursue their own material objectives and prices are determined by demand and supply of a country’s individual citizens and businesses respectively. Government interference is minimal and the government does not engage in central planning.
Thinkers: Smith, Marshal, Hayek
Markets
Markets are institutions in which individuals exchange goods and services usually using money as a medium of exchange. Markets can be distinguished according to the goods or services traded in them (e.g., financial markets, housing markets, labor markets), according to their scope (e.g., regional, national, international markets), or according to their structure (e.g., competitive markets, oligopolistic markets, monopolistic markets).
Monetary policy
The set of actions and regulations by the central bank used to control and maintain the size and growth rate of the money supply, the cost, and availability of credit, and the composition of the national debt.
Thinkers: Friedmann
Paradigm
The orthodox framework containing the assumptions, ways of thinking, and methodology underlying (economic) theories that are most commonly accepted by members of a scientific community.
Thinkers: Kuhn, Popper
Production
The act of creating or manufacturing a certain good or service, for which factors of production are used. Forms the basis of the supply curve in the Marshallian framework.
Thinkers: Marshall
Scarcity
The insufficiency or shortness in availability of time, resources, skills and goods, due to the unlimited wants of mankind. Scarcity is the ultimate problem underlying economics and drives actors to allocate resources efficiently.
School of thought
A particular set of ideas held by a specific group. School of thoughts create paradigms.
Chrematistiké
Economic activity with the goal of sheer profit making, which was considered unnatural and hence unjust.
Thinkers: Aristotle
Division of labour
The separation of tasks in the supply chain which allows for specialization and therefore increased quality and quantity of production.
Thinkers: Xenophon, Smith, Marx
Exchange value
The quantitative aspect of value of a good or service. It indicates what (quantity of) other commodities it will exchange for, if traded.
Thinkers: Xenophon, Marx
Feudalism
The medieval system in which people were given land and protection by people of a higher social class in exchange for their loyalty and service.
Guild
An association of producers which regulate the supply of a good or service in a local market. All suppliers work within a framework of shared regulations of production and pricing.
Just price doctrine
A doctrine advanced as response to the ethical debate surrounding usury in the Middle Ages. For Aquinas the just price is the current price, which depends on location, time and risk of transport. Willingness to pay should not influence the price and profit-making is only virtuous if there is a just price in exchange.
Thinkers: Aristotle, Aquinas
Manorial system
Economic system preceding the market system, in which local lords were centres of polical, military, economic and social power.
Normative economics
Normative economis is the branch of economics that expresses value judgements about economic fairness, the goals of public policy or what the outcomes of economic activity should be.
Thinkers: Amartya Sen
Oikonomia
Household management, which was the only virtuous form of economic activity in the eyes of Aristotle. It comes from οἶκος (oîkos, “house”) + νόμος (nómos, “law”).
Thinker: Aristotle