Vocabulary Flashcards
Economy
all the production and exchange activities that take place
Economic Activity
how much buying and selling goes on in the economy over a period of time
Land
natural resources on Earth
Labour
human effort put into production
Capital
equipment and structures used to produce goods
Economics
is the study of how society manages its scarce resources
Trade off
the loss of the benefits from a decision to forego or sacrifice one option balanced against the benefits incurred from the choice
(taking into account all benefits of all alternatives and choosing which benefit fulfills us at its best)
Opportunity Costs
sacrifices in decision making
Economic System
is how resources are organized and allocated to provide for the needs of an economy’s citizens.
Capitalist economic system
a system which relies on the private ownership of factors of production to produce goods and services which are exchanged through a price mechanism and where production is operated primarily for profit
Market economy
an economy that addresses the three key questions of the economic problem by allocating resources through the decentralised decisions of many firms and households as they interact in markets for goods and services
Planned economic systems
economic activities organised by central planners who decided on the answers to the fundamental economic questions
(communism)
Market failure
when the market fails to efficiently allocate resources
Microeconomics
the study of how households and firms make decisions and how they interact in markets
Macroeconomics
the study of economy-wide phenomena, including inflation, unemployment and economic growth
