Unit 1 Vocab Flashcards
Economics
The study of how people try and satisfy UNLIMITED WANTS with LIMITED RESOURCES
Opportunity cost
The cost of the next best alternative use of money, time, or resources when one choice is made rather than another
Entrepreneur
“Risk taker” starts a business; search of profits
Resource
Anything that can be used to produce something else(land, labor, capital, entrepreneurship)
Microeconomics
The study of how households and firms make decisions and how they interact in markets
Macroeconomics
The study of the economy as a whole; focuses on the big picture and ignores fine details
Economic aggregate
Economic measures that summarize data across many different markets
Positive economics
The branch of economic analysis that describes the way the economy actually works
Normative economics
Makes opinions about the way the economy should work
Market economy
The decision of individual producers and consumer largely determine what, how, and for whom to produce, with little government involvement in the decisions
Business cycle
The short-run alternation between economic upturn, known as expansions, and downturns, known as recessions
Trough/peak
The low and the high point in a typical business cycle
Depression
A very deep and prolonged downturn
Recession
Periods of economic downturns when output and employment are falling
Expansion
“Recoveries”; periods of economic upturn when output and employment are rising
Price Stability
The aggregate price level is changing only slowly
Inflation and deflation
When the overall price is rising or falling
Economic growth
Increase in the maximum amount of goods and services an economy can produce
Employment
The number of people currently employed in the economy
Unemployment
The number of people who are actively looking for work but aren’t currently employed
Labor force
Equal to the sum of employment and unemployment
Trade-off
Alternate choices when spending money or time
PPC
Model illustrates the trade-off facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced
Tariff
A tax imposed by one country on the goods and services imported from another country
Comparative advantage
Country’s ability to produce a given product relatively more efficiently than another country
Absolute advantage
Country ability to produce a given product more efficiently than can another country
Trade
When Individuals provide goods and services to others and receive goods and services in return
Specialization
A situation in which different people each engage in the different task that he or she is good at performing
Capital
Anything long-lasting that is created by humans for use in production; tools, factories
Efficiency
Society gets the most from scarce resources
Equity
When prosperity is distributed uniformly among society’s members
Circular flow model
Product market: consumers demand, producers supply; Resource market: producers demand and consumers supply
Incentive
A payment or concession to stimulate greater output or investment
