Introduction to Economics Flashcards
Understand the important concepts of economics and the models of economics
oikonomos
“the one who manages the household”
Economy
comes from the Greek word oikonomos
True or False:
A household faces only one decision
False. A household faces many decisions
Scarcity
society has limited resources and therefore cannot produce goods services people have
True or False:
An individual can attain the highest standard of living
False because resources are limited.
Study of how society manages its scarce resources
Economics
They study how people make decisions
Economists
Decisions are made by ____ and ______
Household and firms
It is the level wherein decisions are made by firms and household
Microeconomics
It is the level that examines the economy as a whole.
Macroeconomics
Determine whether microeconomics or macroeconomics.
Change of income can change the demand of the product
Microeconomics
Determine whether microeconomics or macroeconomics.
Question of unemployment
Macroeconomics
Determine whether microeconomics or macroeconomics.
State activity that increases the economics growth
Macroeconomics
The concept that we have limited resources and cannot meet unlimited demand
Scarcity
Why do we use the term scarcity instead of limited when we talk about resources?
The concept of scarcity is not limited only to the quantity (or availability of a product or service) but also the quality. Example: Before the Industrial Revolution, there was no scarcity of clean air.
True or False
Society can produce everything people wish to have
False.
True or False
Without microeconomics, we can understand macroeconomics
False. Although we differentiate the two levels, there is a strong relationship between the two levels. In other words, without microeconomics, we can’t understand macroeconomics.
In this model, the economy is simplified to include the two types of decision makers, the firms and household.
Circular Flow Diagram
Give three examples of inputs that a firm produces
labor, land and capital (buildings and machines)
They own the factors of production and consume the goods and services that firms produces
Household
They produce the goods and services using inputs such as labor, land and capital
Firms
The two types of market that firms and household interact on
market for goods and services and market for the factors of production
In market for goods and services, household are ____ and _____ are sellers
buyers, firms
In market for factors of production, household are ______ and _____ are buyers
sellers, firms
They hire and use factors of production
Firms
What’s missing in the circular flow diagram model?
Government
