AP Macro Module 1 Flashcards

Basic economic terms and concepts including economy types, supply and demand curves, price ceilings, and price floors.

5800134822	macroeconomics	the study of aggregate economic variables such as national income, employment, interest rates, exchange rates, and prices	0
5800135807	market economy	type of economy where forces of supply and demand determine how production will be managed (ex. United States)	1
5800137634	command economy	type of economy where the government makes all the decisions and owns all the factors of production (ex. Cuba)	2
5800138120	traditional economy	economic decisions are made based on the way ancestors did things (ex. third world countries)	3
5800140120	Four Factors of Production	land, labor, capital, entrepreneurship	4
5800141266	opportunity cost	the most valuable sacrifice for choosing one thing over another.	5
5800141890	production possibilities curve (PPC)	a graph displaying the maximum amount that can potentially be produced by one nation or producer at a given time, with current resources and technology.	6
5800147223	Formula for Opportunity Cost	Opportunity Cost of A=B/A or sacrifice/gain	7
5800149311	The Law of Increasing Opportunity	as you increase the unit production of one factor, the unit production of another factor must decrease	8
5800151217	absolute advantage	when an individual, group, or country has the ability to produce a product more efficiently than another.	9
5800151741	comparative advantage	when an individual, group, or country has the ability to produce a product at a lower opportunity cost than another.	10
5800155391	demand	when an entity is both willing and able to purchase an item.	11
5800156618	If price is high, then	quantity demanded is low	12
5800156619	If price is low, then	quantity demanded is high	13
5800158116	Demand curves have a	negative slope	14
5800159544	Demand shift curves can be due to:	tastes, related goods, income, buyers, or expectations (TRIBE)	15
5800161075	compliments	goods whose demand is dependent upon the change in price of a another good (ex. shoelace demand increases when tennis shoe prices decrease)	16
5800162672	substitutes	goods whose demand increases as the price of another good increases (ex. sandals are substitutes for tennis shoes)	17
5800163910	income effect	a change in income will lead to a change in consumption	18
5800164795	substitution effect	a change in income will lead to a substitution of less expensive goods for expensive ones	19
5800165650	supply	when producers are willing and able to produce goods and services at different prices in the marketplace	20
5800167268	A change in price will only change. . .	quantity supplied	21
5800169706	Supply curves can shift due to:	resources, opportunities, taxes, technology, expectations, or number (ROTTEN)	22
5800173767	equilibrium	the point where the supply and demand curves meet	23
5800176627	Teens start to prefer prefer breath mints over gum.		24
5800178385	Teen income increases, increasing demand for gum.		25
5800179752	Government increases taxes on gum suppliers.		26
5800181278	New machine makes gum faster and cheaper.		27
5800185297	Price is indeterminate in a double shift if. . .	you don't know if supply or demand would increase more.	28
5800189226	price floor	when the government sets the lowest price a business is allowed to charge for a good or service	29
5800189868	Price floors result in. . .	a surplus since producers are making more goods than people are willing to buy at the price set by the government.	30
5800189869	price ceiling	when a legal price maximum is placed on a good	31
5800190653	Price ceilings result in. . .	a shortage of goods since demand is higher than supply.	32