midterm vocab Flashcards
Economics
The study of Individuals, Buisnesses, and gov
Macro
the study as a whole
micro
the study smaller/ individually
Scarcity
the lack of a resource
ie; goods/services/labor
goods and services market;
labor markets;
in a goods and services market; firms are sellers, households are buyers
in a labor market; households are sellers, firms are buyers
different types of economies
Traditional
command
market
underground
Traditional- oldest, consume what you produce, little economic progression
Command- gov is mainly in charge they make all the rules
market- individuals/businesses offer goods and services and the gov just oversees
underground- black market
Globalization
a way to measure international trade
-expanding globally
GDP
measures the size of total production within a country/economy
Imports and exports
Imports- domestically sold
exports- sold abroad
opportunity cost
the cost of one item is the lost opportunity to purchase or do something else (what you are giving up for that product)
sunk cost
cost previously incurred and cannot be recovered
(past transaction that you cannot make-up)
Utility
the satification of the product; how much it is wanted
marginal analysis
pros and cons of choosing more or less of a good
Productive Efficiency
when it is impossible to produce more of one good without decreasing the quantity produced of another
Allocative Efficiency
producers supply only what is demanded by society
comparative advantage
the ability of a country to produce a good at a lower opportunity cost then another country
absolute advantage
the ability of a country to produce more of a good than another country
invisible hand
individuals “self-interest behavior can lead to positive social outcomes”
shortage
when demand is higher than the production rates
Price celling
keeps prices below a “Certain” level
Price floor
Keeps prices from “falling” below a set level
consumer
producer
and social (total) surplus
consumer- area above the market price and below the demand curve, represents the price consumers are willing to pay above the actual market cost (price they paid)
Producer- area below the market price and above the supply curve, represents the price consumers paid (market) above the price at which producers were willing to sell
Social (total)- sum of consumer and producer surplus
equilibrium
Quantity demanded EQUALS quantity supplied
Elasticity and price elasticity
Elasticity- measures the responsiveness of one variable to another
Price elasticity- the ratio between the % of change in the quantity demanded or quantity supplied and the corresponding change in price
Unitary Elasticity
proportional responsiveness to either supply or demand based on price change
Perfect Elasticity
is highly responsive to price changes
Perfect inelasticity
does not respond to any change in price
trade surplus
exports are greater than imports
Trade deficit
imports are greater than exports
Real GDP
GDP adjusted for inflation
Depression
lengthy and deep recession
recession
last from peak to trough, significant decline in real GDP
Aggregate production function
illustrates the connection between inputs and outputs
Capital deepening
increase in the level of capital, per person
Convergence
the pattern of economies with low per capita incomes growing faster than economies with high per capita income
Labor force
employed
unemployed
out of the labor force
Labor force- number of employed plus number of unemployed
Employed- currently working for pay
Unemployed- out of work, available to work and looking for work during the previous four week period
out of the labor force- out of work and not actively looking for work
Cyclical unemployment
Variation in unemployment as the economy moves through the business cycle
natural rate of unemployment
Frictional
structural
Natural rate- level of unemployment in a growing and healthy economy from the combination of economic, social, and political factors
Frictional- moving between jobs
Structural- occurs because workers lack skill
Consumer price index
the most commonly used measure of inflation
-bases on prices of a fixed basket of goods
Core inflation index
Excludes volatile variables such as energy and food
Unilateral transfers
payments the gov, individuals, or charities send abroad without receiving any direct good or service
