Chapter 1 AP Macroeconomics Flashcards

8775990101	economics	the study of scarcity and choice	0
8775992736	individual choice	decisions by individuals about what to do and what not to do	1
8775995160	economy	system that coordinates choices about production with choices about consumption, and distributes goods and services to the people that want them	2
8776006077	market economy	production and consumption are the result of decentralized decisions by many firms and individuals	3
8776011495	command economy	industry is publicly owned and there is a central authority making porduction and consumption decisions	4
8776018397	incentives	rewards or punishments that motivate particular choices	5
8776022581	property rights	establish ownership and grant individuals the right to trade goods and services with each other	6
8776028600	marginal analysis	study of the costs and benefits of doing a little bit more of an activity versus a little bit less	7
8776034713	resource	anything that can be used to produce something else. 4 different categories: land, labor, capital, and entrepreneurship	8
8776046963	entrepreneurship	efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes	9
8776059105	scarcity	resource not available in sufficient quantities to satisfy all the various ways a society want to use it	10
8776066766	opportunity cost	the value of what you must give up when you make a particular choice (the next best alternative)	11
8776075274	microeconomics	stud of how individuals, households, and firms make decisions and how those decisions interact	12
8776080679	macroeconomics	studies the overall ups and down of the economy	13
8776085418	economic aggregates	economic measures that summarize data across many different markets ex) GDP, unemployment rate, inflation rate, etc.	14
8776093655	positive economics	branch of economic analysis that describes the way the economy actually works--facts and description	15
8776100450	normative economics	makes prescriptions about the way the economy SHOULD work--opinions and suggestions	16
8776113920	business cycle	alternation between economic downturns and upturns	17
8776118140	depression	deep and prolonged downturn	18
8776120833	recessions	periods of economic downturns when output and employment are falling (usually must last at least 6 months)	19
8776127818	expansions	recoveries, are periods of economic upturns when the output and employment are rising	20
8776134538	employment	number of people currently working for pay in the economy	21
8776140553	unemployment	number of people ACTIVELY looking for work but aren't currently employed	22
8776147823	labor forcce	sum of employment and unemployment	23
8776151170	unemployment rate	percentage of labor force that is unemployed	24
8776155442	output	quantity of goods and services produced	25
8776158477	aggregate output	economy's total production of goods and services for a given time period--falls during a recession and rises in expansion	26
8776167196	inflation	rising overall price level (2% is desirable)	27
8776173560	deflation	fall in overall price level--worse than inflation because people hold on to their money	28
8776183552	price stability	when overall price level is changing only slowly if at all--helps keep the economy stable and avoids uncertainty	29
8776191765	economic growth	increase in the maximum possible output of an economy--permits a sustained rise in aggregate output over time	30
8776199196	model	simplified representation used to better understand a real-life situation	31
8776202866	other things equal assumption	(ceteris paribus) all other relevant factors remain unchanged	32
8776209841	trade-off	when you give up something in order to have something else	33
8776213137	production possibilities curve	illustrates the trade-offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for each possible quantity of the other good produces	34
8776232084	efficient	no way to make anyone better off without making at least one person worse off	35
8776236191	productive efficiency	an economy produces at a point on its production possibilities curve	36
8776249021	allocative efficiency	economy produces at the point along its production possibilities curve that makes consumers as well off as possible	37
8776258066	technology	technical means for the production of goods and services	38
8776265166	trade	people divide tasks among themselves and each person provides a good or service that other people want in return for different goods and services that they want	39
8776276241	gains from trade	people can get more of what they want through trade than they could if they tried to be self-sufficient	40
8776285311	specialization	each person specialized in the task that they are good at performing	41
8776289604	comparative advantage	when the opportunity cost of producing the good or service is lower for an individual than for other people--is what matters in trade	42
8776295994	absolute advantage	an individual can produce more output with a given amount of input that others	43
8776308623	terms of trade	indicate the rate at which one good can be exchanged for another	44