Macro Economics Chapter 02 Key Words Flashcards
economic growth
The ability of an economy to produce greater levels of output, represented by an outward shift of its production possibilities curve.
investment
The accumulation of capital, such as factories, machines, and inventories, that is used to produce goods and services.
law of increasing opportunity costs
The principle that the opportunity cost increases as production of one output expands.
marginal analysis
An examination of the effects of additions to or subtractions from a current situation.
opportunity cost
The best alternative sacrificed for a chosen alternative.
production possibilities curve
A curve that shows the maximum combinations of two outputs an economy can produce in a given period of time with its available resources and technology.
technology
The body of knowledge applied to how goods are produced.
