intro to economics and microeconomics Flashcards
Command economy
an economic system in which the means of production are publicly owned and economic activity is directed by a central government or portion of the government
opportunity cost
the cost of choosing what you give up by choosing one option
oligopoly
a market characterized by a small number if firms who realize they are interdependent in their pricing
long run supply line
supply is determined by demand
margin cost (MC)
why the supply line slopes up; inverse relationship with marginal productivity graphs
Factor Market
the exchange of inputs we produce
Product Market
the exchange of goods and services
Cyclical unemployment
the unemployment associated with recessions and expansions
Disinflation
a slowing of the rate of inflation; inflation is still occurring, just not as fast
Consumer Price Index (CPI)- an index that calculates the cost of a market basket of goods purchased by a typical family living in an urban area
Price index
a measure that calculates the changing cost of particular goods (“market basket”) each year
Purchasing power
what can be bought with a set amount of money
Real Interest Rate
the interest rate earned that reflects the actual purchasing power of that interest (interest-inflation rate)
Normal GDP
“current price” the market value of the final production of goods and services within a country in a given period using that year’s prices
Real GDP
nominal GDP adjusted for the changes in the price level from the base year
GDP Deflator
a price index used to adjust nominal GDP to find the real GDP
