AP Macroeconomics Unit 1 Flashcards

6183013567	scarcity	the basic economic problem; it is a lack of needed or wanted resources relative to the demand for the resources.	0
6183013568	TINSTAAFL	acronym for THERE IS NO SUCH THING AS A FREE LUNCH; means that there is always a cost for a product, even if it is not evident.	1
6183013569	rational self-interest	individuals pursue actions that will enable them to achieve their greatest satisfaction	2
6183013570	opportunity cost	what you give up when you make a choice	3
6183013571	marginal analysis	comparisons of costs and benefits of creating one additional unit- or doing something one more time	4
6183013572	ceteris paribus	other-things equal assumption; assumes that all other variables except those under immediate consideration are held constant	5
6183013573	microeconomics	looks at specific economic units such as businesses and consumer behavior	6
6183013574	macroeconomics	study of the economy as a whole, such as total output, total employment, total income, etc.	7
6183013575	positive economics	states economics by facts,avoiding value judgements	8
6183013576	normative economics	incorporates value judgements	9
6183013577	utility	the pleasure, happiness, or satisfaction obtained from consuming a good or service.	10
6183013578	factors of production	resources; includes land, labor, capital, and entrepreneurship.	11
6183013579	command economy (socialism, communism)	system that relies on public ownership of resources and the use of central planning; government makes most economic decisions	12
6183013580	market economy	private ownership of resources; markets and prices coordinate economic activity; government plays a role in the economy by providing rules, enforcing contracts, providing public goods	13
6183013581	market economy	most economies today fall into this category	14
6183013582	specialization	a process in which an individual or business completes one task repetitively and develops expertise in that task; increases productive efficiency	15
6183013583	consumer goods	goods made for direct consumption	16
6183013584	trade-offs	all possible options	17
6183013585	PPC shifters	change in resource availability, change in technology or productivity,	18
6183013586	production possibilities curve	a model showing the trade-offs between two economic choices; illustrates the concept of opportunity cost	19
6183013587	Mixed Economy	Market-based economic system with limited government involvement	20
6183013588	Liquidity	A measure of how quickly an asset can be converted to into another asset (or used to buy hamburgers)	21
6183013589	Interest rate	The % that a saver is paid OR the cost of borrowing	22
6183013590	Cash	Most Liquid asset possible	23
6183013591	CD	Financial asset, typically earning a higher interest rate than saving or checking account in exchange for being less liquid (pay a penalty for early withdrawal)	24
6183013592	Bond	Certificate issued by a government or company promising to pay back a borrowed sum with interest- Represents an asset to the party that owns it, a liability to the group that issued it	25