Module 1 Intro to Macroeconomics- Vocab

Question 1

Allocative Efficiency

Answer 1

The economic measure of efficiency that the combination of goods and services produced represents the combination that society most desires.

Question 2

Circular flow diagram

Answer 2

A picture of an economy in which the major exchanges are represented as flows of money,
goods and services between major economic agents.

Question 3

Dynamic efficiency

Answer 3

The economic measure of efficiency that assesses the ability of an economy to become more productively efficient.

Question 4

Equilibrium

Answer 4

The economic principle states that prices adjust until quantity demand is equal to quantity
supplied.

Question 5

Macroeconomics

Answer 5

The branch of economics that studies the economy as a whole.

Question 6

Microeconomics

Answer 6

The branch of economics that studies individual exchange.

Question 7

Normative economics

Answer 7

Economic opinion

Question 8

Opportunity cost

Answer 8

The value of the one next-best option that is given up for what is chosen.

Question 9

Positive economics

Answer 9

Economic data and verifiable information.

Question 10

Productive efficiency

Answer 10

The economic measure of efficiency that assesses an economy by its ability and organization to
produce output and provide services.

Question 11

Social efficiency

Answer 11

The economic measure of efficiency that assesses an economy by its ability and organization to
increase the happiness and well-being for the greatest number.