Econ 102 - Macroeconomics; unit 1 Flashcards
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| 206591677 | Economics | The study of how people use their scarce resources to satisfy their unlimited wants | |
| 206591678 | Resources | The inputs, or factors of production, used to produce the goods and services that people want; resources consist of labor, capital, natural resources, and entrepreneurial ability | |
| 206591679 | Labor | The physical and mental effort used to produce goods and services | |
| 206591680 | Capital | The buildings, equipment, and human skills used to produce goods and services | |
| 206591681 | Natural resources | All gifts of nature used to produce goods and services; includes renewable and exhaustible resources | |
| 206591682 | Entrepreneurial ability | The imagination required to develop a new product or process, the skill needed to organize production, and the willingness to take the risk of profit or loss | |
| 206591683 | Entrepreneur | A profit-seeking decision maker who starts with an idea, organizes an enterprise to bring that idea to life, and assumes the risk of the operation | |
| 206591684 | Wages | Payment to resource owners for their labor | |
| 206591685 | Interest | Payment to resource owners for the use of their capital | |
| 206591686 | Rent | Payment to resource owners for the use of their natural resources | |
| 206591687 | Profit | Reward for entrepreneurial ability; sales revenue minus resource cost | |
| 206591688 | Good | A tangible product used to satisfy human wants | |
| 206591689 | Service | An activity, or intangible product, used to satisfy human wants | |
| 206591690 | Scarcity | Occurs when the amount people desire exceeds the amount available at a zero price | |
| 206591691 | Market | A set of arrangements by which buyers and sellers carry out exchange at mutually agreeable terms | |
| 206591692 | Product market | A market in which a good or service is bought and sold | |
| 206591693 | Resource market | A market in which a resource is bought and sold | |
| 206591694 | Circular-flow model | A diagram that traces the flow of resources, products, income, and revenue among economic decision makers | |
| 206591695 | Rational self-interest | Each individual tries to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit | |
| 206591696 | Marginal | Incremental, additional, or extra; used to describe a change in an economic variable | |
| 206591697 | Microeconomics | The study of the economic behavior in particular markets, such as that for computers or unskilled labor | |
| 206591698 | Macroeconomics | The study of the economic behavior of entire economies, as measured, for example, by total production and employment | |
| 206591699 | Economic fluctuations | The rise and fall of economic activity relative to the long-term growth trend of the economy; also called business cycles | |
| 206591700 | Economic theory, or economic model | A simplification of reality used to make predictions about cause and effect in the real world | |
| 206591701 | Variable | A measure, such as price or quantity, that can take on different values at different times | |
| 206591702 | Other-things-constant assumption | The assumption, when focusing on the relation among key economic variables, that other variables remain unchanged; in Latin, ceteris paribus | |
| 206591703 | Behavioral assumption | An assumption that describes the expected behavior of economic decision makers, what motivates them | |
| 206591704 | Hypothesis | A theory about how key variables relate | |
| 206591705 | Positive economic statement | A statement that can be proved or disproved by reference to facts | |
| 206591706 | Normative economic statement | A statement that reflects an opinion, which cannot be proved or disproved by reference to the facts | |
| 206591707 | Association-is-causality fallacy | The incorrect idea that if two variables are associated in time, one must necessarily cause the other | |
| 206591708 | Fallacy of composition | The incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole | |
| 206591709 | Secondary effects | Unintended consequences of economic actions that may develop slowly over time as people react to events | |
| 206591710 | Opportunity cost | The value of the best alternative forgone when an item or activity is chosen | |
| 206591711 | Sunk cost | A cost that has already been incurred, cannot be recovered, and thus is irrelevant for present and future economic decisions | |
| 206591712 | Law of comparative advantage | The individual, firm, region, or country with the lowest opportunity cost of producing a particular good should specialize in that good | |
| 206591713 | Absolute advantage | The ability to make something using fewer resources than other producers use | |
| 206591714 | Comparative advantage | The ability to make something at a lower opportunity cost than other producers face | |
| 206591715 | Barter | The direct exchange of one product for another without using money | |
| 206591716 | Division of labor | Breaking down the production of a good into separate tasks | |
| 206591717 | Specialization of labor | Focusing work effort on a particular product or a single task | |
| 206591718 | Production possibilities frontier (PPF) | A curve showing alternative combinations of goods that can be produced when available resources are used efficiently; a boundary line between inefficient and unattainable combinations | |
| 206591719 | Efficiency | The condition that exists when there is no way resources can be reallocated to increase the production of one good without decreasing the production of another; getting the most from available resources | |
| 206591720 | Law of increasing opportunity cost | To produce more of one good, a successively larger amount of the other good must be sacrificed | |
| 206591721 | Economic growth | An increase in the economy's ability to produce goods and services; reflected by an outward shift of the economy's production possibilities frontier | |
| 206591722 | Economic system | The set of mechanisms and institutions that resolve the what, how, and for whom questions | |
| 206591723 | Pure capitalism | An economic system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets | |
| 206591724 | Private property rights | An owner's right to use, rent, or sell resources or property | |
| 206591725 | Pure command system | An economic system characterized by the public ownership of resources and centralized planning | |
| 206591726 | Mixed system | An economic system characterized by the private ownership of some resources and the public ownership of other resources; some markets are regulated by government | |
| 206591727 | Utility | The satisfaction received from consumption; sense of well-being | |
| 206591728 | Transfer payments | Cash or in-kind benefits given to individuals as outright grants from the government | |
| 206591729 | Industrial Revolution | Development of large-scale factory production that began in Great Britain around 1750 and spread to the rest of Europe, North America, and Australia | |
| 206591730 | Firms | Economic units formed by profit-seeking entrepreneurs who employ resources to produce goods and services for sale | |
| 206591731 | Sole proprietorship | A firm with a single owner who has the right to all profits but who also bears unlimited liability for the firm's losses and debts | |
| 206591732 | Partnership | A firm with multiple owners who share the profits and bear unlimited liability for the firm's losses and debts | |
| 206591733 | Corporation | A legal entity owned by stockholders whose liability is limited to the value of their stock ownership | |
| 206591734 | Cooperative | An organization consisting of people who pool their resources to buy and sell more efficiently than they could individually | |
| 206591735 | Not-for-profit organizations | Groups that do not pursue profit as a goal; they engage in charitable, educational, humanitarian, cultural, professional, or other activities, often with a social purpose | |
| 206591736 | Information Revolution | Technological change spawned by the microchip and the Internet that enhanced the acquisition, analysis, and transmission of information | |
| 206591737 | Market failure | A condition that arises when the unregulated operation of markets yields socially undesirable results | |
| 206591738 | Monopoly | A sole supplier of a product with no close substitutes | |
| 206591739 | Natural monopoly | One firm that can supply the entire market at a lower per-unit cost than could two or more firms | |
| 206591740 | Private good | A good, such as pizza, that is both rival in consumption and exclusive | |
| 206591741 | Public good | A good that, once produced, is available for all to consume, regardless of who pays and who doesn't; such a good is nonrival and nonexclusive, such as a safer community | |
| 206591742 | Externality | A cost or a benefit that affects neither the buyer or the seller, but instead affects people not involved in the market transaction | |
| 206591743 | Fiscal policy | The use of government purchases, transfer payments, taxes, and borrowing to influence economy-wide variables such as inflation, employment, and economic growth | |
| 206591744 | Monetary policy | Regulation of the money supply to influence economy-wide variables such as inflation, employment, and economic growth | |
| 206591745 | Ability-to-pay tax principle | Those with a greater ability to pay, such as those earning higher incomes or those owning more property, should pay more taxes | |
| 206591746 | Benefits-received tax principle | Those who get more benefits from the government programs should pay more taxes | |
| 206591747 | Tax incidence | The distribution of tax burden among taxpayers; who ultimately pays the tax | |
| 206591748 | Proportional taxation | The tax as a percentage of income remains constant as income increases; also called a flat tax | |
| 206591749 | Progressive taxation | The tax as a percentage of income increases as income increases | |
| 206591750 | Marginal tax rate | The percentage of each additional dollar of income that goes to the tax | |
| 206591751 | Regressive taxation | The tax as a percentage of income decreases as income increases | |
| 206591752 | Merchandise trade balance | The value during a given period of a country's exported goods minus the value of its imported goods | |
| 206591753 | Balance of payments | A record of all economic transactions during a given period between residents of one country and residents of the rest of the world | |
| 206591754 | Foreign exchange | Foreign money needed to carry out international transactions | |
| 206591755 | Tariff | A tax on imports | |
| 206591756 | Quota | A legal limit on the quantity of a particular product that can be imported or exported | |
| 206591757 | Demand | A relation between the price of a good and the quantity that consumers are willing and able to buy per period, other things constant | |
| 206591758 | Law of demand | The quantity of a good that consumers are willing and able to buy per period relates inversely, or negatively, to the price, other things constant | |
| 206591759 | Substitution effect of a price change | When the price of a good falls, that good becomes cheaper compared to other goods so consumers tend to substitute that good for other goods | |
| 206591760 | Money income | The number of dollars a person receives per period, such as $400 a week | |
| 206591761 | Real income | Income measured in terms of the goods and services it can buy; real income changes when the price changes | |
| 206591762 | Income effect of a price change | A fall in the price of a good increases consumers' real income, making consumers more able to purchase goods; for a normal good, the quantity demanded increases | |
| 206591763 | Demand curve | A curve showing the relation between the price of a good and the quantity consumers are willing and able to buy per period, other things constant | |
| 206591764 | Quantity demanded | The amount of a good consumers are willing and able to buy per period at a particular price, as reflected by a point on the demand curve | |
| 206591765 | Individual demand | The relation between the price of a good and the quantity purchased by an individual consumer per period, other things constant | |
| 206591766 | Market demand | The relation between the price of a good and the quantity purchased by all consumers in the market during a given period, other things constant; sum of the individual demands in the market | |
| 206591767 | Normal good | A good, such as new clothes, for which demand increases, or shifts rightward, as consumer income rises | |
| 206591768 | Inferior good | A good, such as used clothes, for which demand decreases, or shifts leftward, as consumer income rises | |
| 206591769 | Substitutes | Goods, such as Coke and Pepsi, that relate in such a way that an increase in one shifts the demand for the other rightward | |
| 206591770 | Complements | Goods, such as milk and cookies, that relate in such a way that an increase in the price of one shifts the demand for the other leftward | |
| 206591771 | Tastes | Consumer preferences; likes and dislikes in consumption; assumed to remain constant along a given demand curve | |
| 206591772 | Movement along a demand curve | Change in quantity demanded resulting from a change in the price of the good, other things constant | |
| 206591773 | Shift of a demand curve | Movement of a demand curve right or left resulting from a change in one of the determinants of demand other than the price of the good | |
| 206591774 | Supply | A relation between the price of a good and the quantity that producers are willing and able to sell per period, other things constant | |
| 206591775 | Law of supply | The amount of a good that producers are willing and able to sell per period is usually directly related to its price, other things constant | |
| 206591776 | Supply curve | A curve showing the relation between price of a good and the quantity producers are willing and able to sell per period other things constant | |
| 206591777 | Quantity supplied | The amount offered for sale per period at a particular price, as reflected by a point on a given supply curve | |
| 206591778 | Individual supply | The relation between the price of a good and the quantity an individual producer is willing and able to sell per period, other things constant | |
| 206591779 | Market supply | The relation between the price of a good and the quantity all producers are willing and able to sell per period, other things constant | |
| 206591780 | Movement along a supply curve | Change in quantity supplied resulting from a change in the price of the good, other things constant | |
| 206591781 | Shift of a supply curve | Movement of a supply curve left or right resulting from a change in one of the determinants of supply other than the price of the good | |
| 206591782 | Transaction costs | The costs of time and information required to carry out market exchange | |
| 206591783 | Surplus | At a given price, the amount by which quantity supplied exceeds quantity demanded; a surplus usually forces the price down | |
| 206591784 | Shortage | At a given price, the amount by which quantity demanded exceeds quantity supplied; a shortage usually forces the price up | |
| 206591785 | Equilibrium | The condition that exists in a market when the plans of buyers match those of sellers, so quantity demanded equals quantity supplied and the market clears | |
| 206591786 | Disequilibrium | The condition that exists in a market when the plans of buyers do not match those of sellers; a temporary mismatch between quantity supplied and quantity demanded as the market seeks equilibrium | |
| 206591787 | Price floor | A minimum legal price below which a product cannot be sold; to have an impact, a price floor must be set above the equilibrium price | |
| 206591788 | Price ceiling | A maximum legal price above which a product cannot be sold; to have an impact, a price ceiling must be set below the equilibrium price |