lessaurn 1 intro to econ Flashcards
social science concerned with the efficient use of scare resources to
achieve the maximum satisfaction of economic wants.
economics
exceed the productive capacity of our limited or scarce resources
economic wants
focuses on facts and cause-and-effect relationship
positive economics
includes description, theory development, and theory testing
(theoretical economics)
positive economics
It avoids value judgments, tries to establish scientific statements
about economic behavior and deals with what the economy is
actually like
positive economics
Incorporates value judgment about economic about what the
economy should be like or what particular policy actions should be
like or what particular policy actions should be recommended to
achieve a desirable goal.
normative economics
It looks at the desirability of certain aspects of the economy
normative economics
three economic problem
what are the products and services to produce?
how to produce?
for whom to produce?
Embodies subjective feelings about what ought to be
normative economics
factors of production
land, capital, labor, entrepreneurial ability
factor of production where it includes all natural resources. used in the production process.
land
factor of production that includes all manufactured aids use in producing consumer goods and service
capital
factor of production is broad term for all the physical and mental talents of
individual available and usable in producing goods and services.
labor
factor of production - special human resources, distinct from
labor
entrepreneurial ability
economic goal - produce more and better goods and services, or,
more simply, develop a higher standard of living
economic growth
economic goal - provide suitable jobs for all citizens who are willing
and able to work
full employment
basic economic goal - achieve the maximum fulfillment of wants using
the available productive resources
economic efficiency
basic economic goal - avoid large upswings and downswings in the
general price level; that is, avoid inflation and deflation
price-level stability
basic economic goal - guarantees that businesses, workers, and
consumers have a high degree of freedom in their economic activities
economic freedom
basic economic goal - ensure that no group of citizens
faces poverty while most others enjoy abundance
equitable distribution of income
basic economic goal - provide for those who are chronically ill, disabled,
laid off, aged, or otherwise unable to earn minimal levels of income
economic security
basic economic goal - seek a reasonable overall balance with the rest of the world in international trade and financial transactions
balance of trade
Examines either the economy as a whole or its basic subdivisions or
aggregates, such as the government, household, and business
sectors.
macroeconomic
collection of specific economic units treated as if they
were one unit
aggregate
look at specific economic units
microeconomics
A particular set of institutional arrangements and a
coordinating mechanism to respond to the economizing problem
economic system
places where buyers and sellers come together
market
is a very backward type of economy. characterized by a system where the production of products, trading and distribution of incomes are sanctioned by custom
traditional economy
Resources are privately owned and the people themselves make decisions
capitalism or market system
There are many independent buyers and sellers of each
product and resources therefore competition arises giving
height to consumer sovereignty
capitalism or market system
government owns the means of production. government dictates. all the capital resources and consumer goods are being divided to its citizenry
command economy
there are only few country that has a pure economic system
mixed system
also known as laissez-faire capitalism where government’s role would be limited to protecting private property and establishing an environment appropriate to the operation of the market system and keep government from interfering with the economy
pure competition
