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ECON 102 > Terms > Flashcards

Terms Flashcards

1
Q

Scarcity

A

The limited nature of society’s resources

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2
Q

Economics

A

Study of how society manages its scarce resources

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3
Q

Efficiency

A

The property of society getting the most it can from its scarce resources

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4
Q

Equity

A

The property of distributing economic prosperity fairly among the members of society

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5
Q

Opportunity Cost

A

Whatever must be given up to obtain some item

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6
Q

Rational People

A

Those who systematically & purposefully do the best they can to achieve their objectives

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7
Q

Marginal Changes

A

Small incremental adjustments to a plan of action

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8
Q

Incentive

A

Something that induces a person to act

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9
Q

Market Economy

A

An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

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10
Q

Property Rights

A

The ability of an individual to own and exercise control over scarce resources

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11
Q

Market Failure

A

A situation in which a market left on its own fails to allocate resources efficiently

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12
Q

Externality

A

The impact of one person’s actions on the well-being of a bystander

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13
Q

Market Power

A

The ability of a single economic actor to have a substantial influence on market prices

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14
Q

Productivity

A

The quantity of goods and services from each hour of a worker’s time

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15
Q

Inflation

A

An increase in the overall level of prices in the economy

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16
Q

Business Cycle

A

Fluctuations in economic activity such as employment and production

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17
Q

Circular Flow Diagram

A

A visual model of the economy that shows how dollars flow through markets among households and firms

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18
Q

Production Possibilities Frontier

A

A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

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19
Q

Macroeconomics

A

The study of economy wide phenomena, including inflation, unemployment, and economic growth

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20
Q

Microeconomics

A

The study of how households and firms make decisions and how they interact in market

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21
Q

Positive Statements

A

Claims that attempt to describe the world as it is

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22
Q

Normative Statements

A

Claims that attempt to prescribe how the world should be

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23
Q

Market

A

A group of buyers and sellers of a particular good or service

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24
Q

Competitive Market

A

A market in which there are many buyers and many sellers so that each has a negligible impact on the market price

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25
Q

Monopoly

A

A market with only one seller that sets the price

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26
Q

The Demand Curve

A

The relationship between price and quantity demanded

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27
Q

Quantity Demanded

A

The amount of a good that buyers are willing and able to purchase

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28
Q

Law of Demand

A

The claim that other things equal the quantity demanded of a good falls when teh price of the good rises

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29
Q

Demand Schedule

A

A table that shows the relationship between the price of a good and the quantity demanded

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30
Q

Demand Curve

A

A graph of the relationship between the price of a good and the quantity demanded

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31
Q

Market Demand

A

Sum of all the individual demands for a particular good or service

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32
Q

Normal Good

A

A good for which, other things equal, an increase in income leads to an increase in demand

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33
Q

Inferior Good

A

A good for which, other things equal, an increase in income leads to a decrease in demand

34
Q

Substitutes

A

Two goods for which an increase in the price of one leads to an increase in the demand for the other

35
Q

Complements

A

Two goods for which an increase in the price of one leads to a decrease in the demand for the other

36
Q

Quantity Supplied

A

The amount of a good that sellers are willing and able to sell

37
Q

Law of Supply

A

The claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

38
Q

Supply Schedule

A

A table that shows the relationship between the price of a good and the quantity supplied

39
Q

Consumer Price Index (CPI)

A

A measure of the overall cost of the goods and services bought by a consumer

40
Q

Inflation Rate

A

The percentage change in the price index from the preceding period

41
Q

Core Inflation

A

A measure of the underlying trend of inflation

42
Q

Indexation

A

The automatic correction of a dollar amount for the effects of inflation by law or contract

43
Q

Nominal Interest Rate

A

The interest rate as usually reported without a correction for the effects of inflation

44
Q

Real Interest Rate

A

The interest rate corrected for the effects of inflation

45
Q

Supply Curve

A

A graph of the relationship between the price of a good and the quantity supplied

46
Q

Market Supply

A

Sum of the supplies of all sellers

47
Q

Input Prices

A

When the price of an input into a good rises, the good becomes less profitable and is produced less, supply is negatively related to the price of inputs

48
Q

Technology

A

The reducing of a firms cost through technology advances increases supply

49
Q

Expectations

A

Supply may decrease if price is expected to rise int he future and store current production

50
Q

Number of sellers

A

Supply would fall if there were less overall sellers

51
Q

Equilibrium

A

A situation in which the price has reached the level where quantity supplied equals quantity demanded

52
Q

Equilibrium Price

A

The price that balances quantity supplied and quantity demanded

53
Q

Equilibrium Quantity

A

The quantity supplied and the quantity demanded at the equilibrium price

54
Q

Surplus

A

A situation in which quantity supplied is greater than quantity demanded

55
Q

Shortage

A

A situation in which quantity demanded is greater than quantity supplied

56
Q

Law of Supply and Demand

A

The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

57
Q

Gross Domestic Product (GDP)

A

The market value of all final goods and services produced within a country in a given period of time

58
Q

Consumption (C)

A

Spending by household on goods and services with the exception of purchases of new housing

59
Q

Investment (I)

A

Spending on capital equipment, inventories and structures, including household purchase of new housing

60
Q

Government Purchases (G)

A

Spending on goods and services by local, territorial, provincial and federal governments

61
Q

Net Exports (NX)

A

The value of a nation’s exports minus the value of its import, also called the trade balance

62
Q

Nominal GDP

A

The production of goods and services valued at current prices

63
Q

Real GDP

A

The production of goods and services valued at constant prices

64
Q

GDP deflator

A

A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100

65
Q

Productivity

A

The quantity of goods and services produced from each hour of a worker’s time

66
Q

Physical Capital

A

The stock of equipment and structures that are used to produce goods and services

67
Q

Human Capital

A

The knowledge and skills workers acquire through education, training and experience

68
Q

Natural Resources

A

The inputs into the production of goods and services that are provided by nature, such as land, rivers and mineral deposits

69
Q

Technological Knowledge

A

Society’s understanding of the best ways to produce goods and services

70
Q

Diminishing Returns

A

The property whereby the benefit from an extra unit of an input declines as the quantity of the input increases

71
Q

Catch-up Effect

A

The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich

72
Q

Foreign Direct Investment

A

A capital investment that is owned and operated by a foreign entity

73
Q

Foreign Portfolio Investment

A

An investment that is financed with foreign money but operated by domestic residents

74
Q

Externality

A

The effect of one person’s actions on the well-being of a bystander

75
Q

Brain Drain

A

The emigration of highly educated workers to rich countries

76
Q

Property Rights

A

The ability of people to exercise authority over the resources they own

77
Q

Inward-oriented Policies

A

Raising productivity and living standards within the country by avoiding interaction with the rest of the world

78
Q

Outward-Oriented Policies

A

Integration of countries into the world economy

79
Q

Public Good

A

Once one person discovers an idea, the idea enters society’s pool of knowledge and other people can freely use it

80
Q

Thomas Malthus

A

Argued that an increasing population would strain society’s resources and keep everyone permanently in poverty

81
Q

Michael Kremer

A

Argued that the growth of the world population also grows technological progress and economic prosperity

ECON 102 (2 decks)

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