Macro Econ Flashcards
Physical capital
The stock of equipment and structures that are used to produce goods and services
Human capital
The knowledge and skills that workers acquire through education, training and experience
Natural resources
The inputs into the production of goods and services that are provided by nature, such as land, rivers and mineral deposits
Technological knowledge
society’s understanding of the best ways to produce goods and services
Diminishing returns
The property whereby the benefit from and extra unit of input declines as the quantity of the input increases
Catch up effect
The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
Circular flow diagram
A visual model of the economy that shows how dollars flow through markets
Production possibilities frontier ppf
Graph that shows the combinations of outputs possible given the available factors
Micro
How households and firms make decisions
Macro
Economy wide phenomena
Positive statements
Describe world how it is
Normative statements
Describes how the world should be
GDP
(Y) the market value of all final goods and services produced within a country in a given period of time
Consumption
(C) spending by households on goods and services with the exception of purchasing a new house
Investment
(I) spending on capital equipment inventories and structures including new housing
