AP Notes, Outlines, Study Guides, Vocabulary, Practice Exams and more!

Praxis 2 Social Studies (0081) Micro / Macro Economics Flashcards

Terms : Hide Images
504669312ScarcityThe limited quantities of resources to meet unlimited wants, the condition that results from limited resources combined with unlimited wants.
504669313Comparative AdvantageThe ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.
504669314Opportunity CostCost of the next best alternative use of money, time, or resources when one choice is made rather than another, the most desirable alternative given up as the result of a decision
504669315Production Possibilities CurveA graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good.
504669316Market PriceThe price at which buyers and sellers agree to trade. The price determined by supply and demand.
504669317Price EquilibriumThe price at which demand and supply are equal.
504669318Price ElasticityThe measure of how responsive both consumers and producers are to price changes, a measure of consumers price sensitivity e = (percent change in quantity demanded)/(percent change inprice)
504669319Fixed CostsCosts that do not vary with the quantity of output produced
504669320Variable CostsCosts that do vary with the quantity of output produced
504669321Average Fixed CostThe total fixed costs (TFC) divided by the number of units produced. It is the only cost that decreases with production.
504669322Average Variable CostTotal variable costs divided by the number of units of output.
504669323Marginal CostThe increase in total cost that arises from an extra unit of production, the increase or decrease in costs as a result of one more or one less unit of output
504669324Law of Diminishing ReturnWhen additonal units of a variable input are added to fixed inputs after a certain point, the marginal product of the variable input declines.
504669325Total ProductAll the goods and services produced by a business during a given period of time with a given amount of input
504669326Average ProductTotal output divided by total units of the variable factor of production
504669327Marginal ProductThe increase in output that arises from an additional unit of input, the additional output that can be produced by adding one more unit of a specific input, ceteris paribus.
504669328Explicit CostsThe actual payments a firm makes to its factors of production and other suppliers.
504669329Implicit CostsAll the firm's opportunity costs of the resources supplied by the firm's owners for which the owners do not make an explicit charge
504669330Accounting ProfitTotal revenue minus total explicit cost.
504669331Economic ProfitTotal revenue minus total cost, including both explicit and implicit costs
504669332Perfect CompetitionA market structure in which a large number of firms all produce the same product. The market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product
504669333MonopolyExclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices
504669334Monopolistic CompetitionMarket or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors.
504669335OligopolyA market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors. A market structure in which a few large firms dominate a market.
504669336Derived DemandDemand for business or organizational products (tires) caused by demand for consumer goods of services (autos).
504669337Labor DemandThe relationship between the quantity of labor demanded by firms and the wage.
504669338GDP (Gross Domestic Product)The total market value of all final goods and services produced annually in an economy
504669339CPI (Consumer Price Index)An index of the cost of all goods and services to a typical consumer
504669340Price IndexAn index that traces the relative changes in the price of an individual good (or a market basket of goods) over time
504669341Aggregate DemandThe total demand for goods and services over varying prices within the economy, including componenting such as household consumption, business investment, government spending & net exports., the amount of goods and services in the economy that will be purchased at all possible price levels.
504669342Unemployment RateMeasures the number of people who are able to work, but do not have a job during a period of time.
504669343Aggregate SupplyThe total amount of goods and services in the economy available at all possible price levels
504669344Keynesian EconomicsTheory stating that government spending should increase during business slumps and be curbed during booms, economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
504669345Money DemandA relationship between the interest rate and the quantity of money that people are willing to hold at any given interest rate.
504669346Money SupplyThe quantity of money available in the economy
504669347Federal Reserve SystemThe country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates
504669348Money MultiplierThe amount of money the banking system generates with each dollar of reserves, the multiple by which deposits can increase for every dollar increase in reserves; equal to 1 divided by the required reserve ratio.
504669349InflationAn increase in the overall level of prices in the economy
504669350StagflationA period of slow economic growth and high unemployment while prices rise (inflation)
504669351RecessionThe state of the economy declines, A period of an economic contraction, sometimes limited in scope or duration.
504669352Automatic StablizersTaxes and transfer payments, Federal government expenditures or receipts that automatically increase or decrease without requiring action by Congress or the President. Examples are unemployment compensation and corporate and individual income tax.
504669353Trade RestrictionsTariffs and quotas restrict the amount of a good imported and supply will decrease
504669354Captial AccountThe net result of public and private international investments flowing in and out of a country. The net results includes foreign direct investment, plus changes in holdings of stocks, bonds, loans, bank accounts, and currencies.
504669355Long Run Phillips CurveRelationship between the inflation rate and the unemployment rate in the long run, looks at long-term natural rate of unemployment.
504669356Equilbrium Exchange RateExchange rate at which demand for a currency is equal to the supply of the currency in the economy.
504669357Price LevelAn index that traces the relative changes in the price of an individual good (or a market basket of goods) over time
504669358Protectionist PolicyA way to "protect" or insulate a domestic industry from competition by foreign producers of the same good. import tariff allows domestic producers to both capture a larger share of the domestic market and charge a higher price than would otherwise be possible
504669359Comparative AdvantageThe ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.
504669360Absolute AdvantageThe ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.
504669361Balance of Payments AccountNational account of international payments and receipts, devided into current account, and capital and financial account
504669362Tade BalanceIs the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.
504669363Trade SurplusWhen a country exports more than it imports
504669364Trade DeficitWhen a country imports more than it exports.
504669365Current AccountThat part of the balance of payments recording a nation's exports and imports of goods and services and transfer payments
504669366Foreign Exchange MarketThe market in which the currencies of different countries are bought and sold.
504669367Capital FlowsInvestment flows per period of time, into and out of a country. EX: Portfolio/FDI
504669368Price FloorAre minimum prices set by the government for certain commodities and services that it believes are being sold in an unfair market, with too low of a price and thus their producers deserve some assistance.
504669369Price CeilingsAre maximum prices set by the government for particular goods and services that they believe are being sold at too high of a price and thus consumers need some help purchasing them.
504669370Diseconomies Of ScaleAn economic concept referring to a situation in which economies of scale no longer function for a firm. Rather than experiencing continued decreasing costs per increase in output, firms see an increase in marginal cost when output is increased.
504669371Economies of ScaleThe increase in efficiency of production as the number of goods being produced increases.
504669372Growth RateIs the percentage increase or decrease of GDP from the previous measurement cycle. It is annualized so it can be compared to the previous year.
504669373Cost Push InflationOccurs when businesses respond to rising production costs, by raising prices in order to maintain their profit margins.
504669374Demand Pull InflationInflation resulting from an increase in aggregate demand. Increases in the following factors: money supply, government purchases, and price level in the rest of the world can impact this.
504669375Nominal ValueThe value of something in current dollars without taking into account the effects of inflation.
504669376Real ValueValue in current dollars after adjusting for inflation.
504669377Structural UnemploymentUnemployment that occurs when workers' skills do not match the jobs that are available. Changes in technology and tastes can have an impact on this.
504669378Frictional UnemploymentIs unemployment that comes from people moving between jobs, careers, and locations
504669379Cyclical UnemploymentUnemployment that rises during economic downturns and falls when the economy improves. Getting laid off due to a recession is the classic case of this.
504669380Seasonal UnemploymentUnemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season.
504669381Nominal Interest RateThe interest rate as usually reported without a correction for the effects of inflation.
504669382Real Interest RateThe interest rate corrected for the effects of inflation.
504669383Fiscal PolicyThe federal government efforts to keep the economy stable by increasing or decreasing taxes or government spending.
504669384BondsA certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate.
504669385Deadweight LossThe fall in total surplus that results from a market distortion, such as a tax.
504669386Infant IndustriesDeveloping industries that require protection to get started.
504669387SubsidiesGovernment loans, grants, and tax deferments given to domestic companies to protect them from foreign competition.
504669388Trade QuotasRestritions to free trade, put a legal limit on the amount that can be imported, creating shortages which cause prices to rise.
504669389TariffsTaxes on imports, raise the price of imported goods, which increases the demand and price for the same goods produced by domestic suppliers. Revenues from these are collected by the domestic government.
504669390EmbargoesProhibit trade with other nations. They bar a foreign nation's imports or ban exports to that nation or both.
504669391Licenses (Trade)May be required of importers of foreign goods so that imports can be restricted.
504669392Trade StandardsAre laws or regulations establishing health and safety standards for imported goods, frequently much stricter than those applied to domestically produced goods.
504669393Expansionary Monetary PolicyFederal Reserve system actions to increase the money supply, lower interest rates, and expand real GDP; an easy money policy.
504669394Expansionary Fiscal PolicyAn increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output
504669395Progressive Income TaxThe percentage of income paid in taxes will increase as income increases.
504669396CartelA consortium of independent organizations formed to limit competition by controlling the production and distribution of a product or service. ex/ OPEC
504669397ConglomerateA group of diverse companies under common ownership and run as a single organization.
504669398Marginal PropensityThe smaller marginal propensity to save, the larger the multiplier; the larger the marginal propensity to consume, the larger the multiplier
504669399Spending MultiplierThe reciprocal of 1 minus the marginal propensity to consume. Or the reciprocal of the marginal propensity to save.
504669400Pure CompetitionA firm produces a homogeneous product and is a small part o the total supply such that it cannot influence market price and total output.

Need Help?

We hope your visit has been a productive one. If you're having any problems, or would like to give some feedback, we'd love to hear from you.

For general help, questions, and suggestions, try our dedicated support forums.

If you need to contact the Course-Notes.Org web experience team, please use our contact form.

Need Notes?

While we strive to provide the most comprehensive notes for as many high school textbooks as possible, there are certainly going to be some that we miss. Drop us a note and let us know which textbooks you need. Be sure to include which edition of the textbook you are using! If we see enough demand, we'll do whatever we can to get those notes up on the site for you!