Year 1 Economics Flashcards
What is macroeconomics?
Economics that looks at the whole economy; the aggregate rather than the individual.
Areas like unemployment, trade, income and prices.
What is the Certeris Paribus?
All other factors remain the same- in economics we look at events in isolation
What is a normative statement?
Subjective, questionable comments that are difficult to test
What are the features of a normative statement?
Influenced by the prejudice of people
Require value judgments
What’s a positive statement?
Objective, factually based comments that can be tested
What are the features of a positive statement?
NOT influenced by the prejudice of people
Allow scientific testing to occur
What is scarcity?
The world’s resources are finite
We can only obtain a limited amount at any moment in time
What 3 factors does the basic economic problem revolve around?
What goods/services to produce
How best to produce goods/services
Who is to receive goods/services
What’s opportunity cost?
Measures the cost of any choice in terms of the next best alternative foregone
What’s the equation for opportunity cost?
Return on most profitable investment - return on investment chosen to pursue
