question
Efficiency
answer
receiving the maximum benefits from limited resources
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Equality
answer
benefits are distributed uniformly among society's members
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Opportunity Cost
answer
what one sacrifices in order to obtain what one wants
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Rational People
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People who do their best to achieve their objects with the available opportunities
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Marginal Change
answer
The smaller decision/trade-off
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Incentive
answer
something that induces a person to act
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Market Economy
answer
Decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in decisions
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Property Rights
answer
Establish ownership and grant individuals the right to trade goods and services with each other
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Market Failure
answer
When a market is left on its own and fails to allocate resources efficiently
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Productivity
answer
Quantity of goods and services produced from each unit of labor
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Inflation
answer
An increase in the overall level of prices in the economy
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Business Cycle
answer
Fluctuations in economic activity between economic downturns, recessions, and economics upturns known as expansions
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Traditional Economic System
answer
Economic tasks are passed on from generation to generation
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Command Economic System
answer
Government answers each question
question
Free Economic System
answer
The producers and consumers answer economic questions
question
Mixed Economic System
answer
Producers, consumers, and government answers economic questions
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Service
answer
Something tangible which satisfies peoples needs
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Scarce
answer
Limited amount of a desired resource
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Four main resources
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Land, Labor, Capital, and Entrepreneurship
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Land
answer
Anything that comes from the earth
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Labor
answer
Payment for salary and wages
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Capital
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Goods that produce other goods for future use
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Entrepreneurship
answer
Business risk and payment comes in the form of profit and loss
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Economics
answer
Study of scarcity and individual choices
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Individual Choice
answer
Decisions by individuals about what to do
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Economy
answer
System for coordinating a society's productive and consumptive activities
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Command Economy
answer
Industry is publicly owned and a central authority makes production an consumption decisions
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Marginal Analysis
answer
Study of the costs and benefits of doing a little bit more of an activity vs. less
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Microeconomics
answer
Study of how individuals make decisions and how those decisions interact
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Macroeconomics
answer
Concerned with overall ups and downs in the economy
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Economic Aggregates
answer
Economic measures that summarize data across many different markets
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Positive Economics
answer
Objective (non-opinionated) statements that while they may not be true, they CAN be TESTED
question
Normative Economics
answer
Subjective statement that CAN'T BE TESTED
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Depression
answer
Very deep and prolonged downturn
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Expansion
answer
periods of economic upturns when output and employment are rising
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Employment
answer
number of people employed in economy
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Unemployment
answer
number of people who are actively looking for work, but aren't employed
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Output
answer
quantity of goods and services produced
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Aggregate Output
answer
economy's total production of goods and services for a given time period
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Deflation
answer
Falling overall price
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Price Stability
answer
Aggregate price level is changing only slowly
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Economic Growth
answer
Increase in the maximum amount of goods and services an economy can produce
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Model
answer
Simplified representation used to better understand a real life situation
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Trade-off
answer
When you give up something in order to have something else
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Production Possibility Curve (PPF)
answer
illustrates the trade-offs facing an economy that produces only two goods.
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Technology
answer
Technical means for the production of goods and services
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Trade
answer
Prove good and services to others and receive goods and services in return
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Gains from trade
answer
Dividing tasks and trading, people can get more of what they want through trade than they could if they tried being self-sufficient
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Comparative Advantage
answer
In producing goods or services if the opportunity cost of producing that good or service is lower for that individual than others
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Absolute advantage
answer
Producing more of a good or service if they can make more of it with a given amount of time and resources
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Households
answer
person or group of people who share income
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Firm
answer
organization that produces and services for sale
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Product Market
answer
goods and services are brought or sold
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Factor Market
answer
where resources, especially capital and labor, are bought and sold
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Consumer Spending
answer
Households spending money on goods and services
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Stocks
answer
Share ownership of a company held by a shareholder
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Bond
answer
loans that pay interest
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