Lesson 1 Flashcards
Economics
The study of how people allocate a limited number of resources to satisfy an unlimited number of wants.
Economic perspective
Involves scarcity and choice
Scarcity
Refers to the fact that there are limited resources
Rational self interest
The assumption that people will act as if they are motivated by self interest and respond predictably to opportunities for gain.
Self interest
The pursuit of goals that make the individual feel better off.
Marginal analysis
Comparing benefits and costs
Factors of production
Land
Labor
Capital
Entrepreneurship
Economic theory
Simplification of economic reality
Economic policy
Remedial action taken to solve economic problems
Fiscal & Monetary policy created
Fiscal policy
Based on tax
Monetary policy
Based on interest rates
Resource
Input in production
Economic good
Something made in production
Land resource
A free gift of nature
Labor
Any physical or mental work done by someone
Capital
Producer goods (tractor, truck, etc.)
Entrepreneurship
Someone who can coordinate the factors of production to create a good or service; innovative
Progression of “Science of Economic Analysis”
Economic theory
Economic policy
Fiscal and monetary policy
Economic problems
Unemployment & inflation
Economic goals
Economic growth, price stability, full employment
What are the economic goals?
Economic growth
Price stability
Full employment
What are the economic problems?
Unemployment
Inflation
Ceteris paribus
Other things equal
Microeconomics
Looks at specific economic units
Macroeconomics
Examines the entire economy
Positive economics
Describes the economy as it is
