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Economics
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The study of scarcity and choice
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Individual choice
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The decision by individuals of what to do and what not to do
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Economy
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A system that coordinates choices about production with choices about consumption, and distributes goods and services to the people who want them
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market economy
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Production and consumption are the result of decentralized decisions by many firms and individuals
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command economy
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Industry is publicly owned and a central authority makes production and consumption decisions
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Incentives
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Rewards or punishments that motivate particular choices
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Property rights
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Established ownership and granted rights to trade goods and services with each other
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Marginal analysis
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The study of the costs and benefits of doing a little bit more of an activity versus a little bit less
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Resource
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Anything that can be used to produce something else
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Land
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Resources that come from nature
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Labor
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The effort of workers
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Capital
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All manufactured goods used to make other goods and services
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Entrepreneurship
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Risk taking, innovation, and the organization of resources for production
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Scarce
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Not enough of the resources are available to satisfy all the various ways a society wants to use them
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Opportunity cost
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The item that must be given up to obtain some other item
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Microeconomics
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The study of the economic behavior and decision making of small units, such as individuals, families, and businesses
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Macroeconomics
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The study of the overall ups and downs of the economy
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Economic aggregates
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Economic measures such as the unemployment rate, the inflation rate, and gross domestic product that summarize data across many different markets
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Positive economics
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Questions about how the world works that have a definite right or wrong answer
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Normative economics
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How the economy/world SHOULD work
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Business cycle
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The fluctuations in economic activity that an economy experienced over a period of time
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Depression
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A sustained, long-term downturn in economic activity in one or more economies
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Recessions
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A period of general economic decline and is typically accompanied by a drop in the stock market, increase of unemployment, and decline in housing market
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Expansions
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An increase in the level of economic activity, and of the goods and services available
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Employment
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The condition in which a resource (especially labor) is actively engaged in a productive activity usually in exchange for an explicit factor payment (such as salary)
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Unemployment
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Americans who are out of work, but actively looking for a job.
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Labor force
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Total number of workers, including both employed and unemployed individuals.
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Unemployment rate
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The percentage of the labor force that is unemployed.
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Output
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The amount of something produced by person, machine, or industry.
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Aggregate output
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An economy's total production of goods and services for a given period of time.
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Inflation
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A general increase in price and fall in the value of money.
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Deflation
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A general decrease in prices and the cost of production and services.
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Price stability
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A period in which the aggregate price is only changing slowly.
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Economic growth
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The increase of production and output of goods of a specific economy.
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Model
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A physical representation of data.
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Centeris paribus
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"All else equal"
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Trade-off
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An alternative that is sacrificed when a decision is made.
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Production possibilities curve
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A model that shows ways that an economy can efficiently use its resources.
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Efficient
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No missed opportunities.
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Technology
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Used to help in production and manufacturing, also helps power economic growth.
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Trade
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Exchange of goods and services.
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Gains from trade
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Positive effects of trade that positively influence included countries.
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Specialization
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A focus on the production on a specific item.
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Comparative advantage
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An advantage in the production of a certain item.
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Absolute advantage
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The ability to produce an item using less resources than another competitor.
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