Krugman's AP Economics: Section 1 Flashcards

10614887134	macroeconomics	Concerned with overall ups and downs of the economy. Nations and world.	0
10614887135	microeconomics	Study of how people make decisions and how those decisions interact. A business or a single product.	1
10614887136	resources	Anything that can be used to produce something else.	2
10614887137	scarcity	Resources aren't available in sufficient quantities to satisfy all the various ways a society wants to use it.	3
10614887138	types of resources	Land, labor, capital, entrepreneurship.	4
10614887139	land	All resources that come from nature, such as minerals, timber, and petroleum.	5
10614887140	labor	The effort of workers.	6
10614887141	entrepreneurship	Describes the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.	7
10614887142	capital	Manufactured goods used to make other goods and services.	8
10614887143	choice	Since resources are scarce, people must make choices about what to produce and buy.	9
10614887144	opportunity cost	What you must give up in order to get an item. The next best thing.	10
10614887145	positive economics	Is the branch of economic analysis that describes the way the economy actually works.	11
10614887146	normative economics	Makes prescriptions about the way the economy should work.	12
10614887147	marginal analysis	The study of the costs and benefits of doing a little bit more of an activity versus a little bit less. Optimal: MC=MB. The more you do of something, benefits decrease and costs increase.	13
10614887148	marginal cost	The cost of doing one more of something.	14
10614887149	marginal benefit	The gains of doing one more of something.	15
10614887150	unemployment	Number of people actively working for work but not currently employed. People spend less money, so businesses get less money, so more people get laid off.	16
10614887151	business cycle	Short-run alternation between expansions and recessions.	17
10614887152	expansion	Also known as recoveries. Periods of economic upturns when output and employment are rising. More people can get jobs because more are hiring.	18
10614887153	economic growth	An increase in the maximum amount of goods and services an economy can produce.	19
10614887154	recession	Periods of economic downturns when output and employment are falling. People lose jobs and less people are hiring.	20
10614887155	peaks	The highest point of an expansion.	21
10614887156	troughs	The lowest point of a recession.	22
10614887157	labor market	The supply of available workers in relation to available work.	23
10614887158	inflation	Rising overall price level.	24
10614887159	deflation	Falling overall price level.	25
10614887160	depression	A very deep and prolonged economic downturn.	26
10614887161	how to calculate opportunity cost	40 fish=30 coconuts. 1 fish=3/4 coconut.*	27
10614887162	constant opportunity cost	The curve is a straight line with a slope. The opportunity cost remains the same throughout the whole curve.*	28
10614887163	increasing opportunity cost	The curve is an actual, "concave" curve. The opportunity is actually small at first, but as resources must be shifted from production of one item to another, the cost increases.*	29
10614887164	points on a production possibilities curve	Points inside the curve are inefficient, and there is no opportunity cost to increase production of one or both items. Points on the curve are efficient and there is an opportunity cost to increase production of one item. Points outside of the curve are optimal and are caused by gains in trade.	30
10614887165	shift of PPC	A shift to the right signals economic growth. This is caused by an increase of available resources, such as new technology.	31
10614887166	gains from trade	People can get more of what they want through trade than they could if they tried to be self-sufficient. This increase in output is due to specialization, when people do more of what they're better at.	32
10614887167	comparative advantage	The advantage that occurs when their opportunity cost of producing an item is lower for that individual than for others, and therefore gives up less.*	33
10614887168	absolute advantage	The advantage that occurs when someone can make more of something than someone else, regardless of opportunity cost.*	34
10614887169	advantages of free trade among nations	Individuals can consume at a higher level then they would without trade.	35
10614887170	compare calculated opportunity cost	A: 1=3, B: 1=4. A has comparative advantage. *	36
10614887171	barter	Trade of one good/service for another. Money is not involved.	37
10614887172	imports	Goods brought into a country.	38
10614887173	exports	Goods shipped out of a country.	39
10614887174	range of trade	Any number between the two opportunity costs of different individuals for the same item = acceptable.	40
10614887175	Adam Smith	Emphasized importance of specialization.	41