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Capital
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Human-made resources used to produce goods and services; goods that don't directly satisfy human wants
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Ceteris Paribus
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all other things being equal
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Circular Flow Model
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an illustration showing the flow of resources from households to firms and of products from firms to households
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Dependent Variable
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Variable that changes as a consequence of a change in some other independent variable; the "effect" or outcome
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Direct Relationship
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Relationship between two variables that change in the same direction
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Economic Growth
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(1) An outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology
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Factors of Production
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Economic resources: land, labor, capital, entrepreneurship
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Fallacy of Composition
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The false notion that what is true for the individual is true for the group
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Functional Distribution of Income
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The manner in which national income is divided among the functions performed to earn it; the division of national income into wages and salaries, proprietors' income, corporate profits, interest, and rent
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Government Transfer Payment
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The disbursement of money (or goods and services) by government for which government receives no currently produced good or service in return
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Human Capital
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The knowledge and skills that make a person productive
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Independent Variable
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The variable causing a change in a dependent variable
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Infrastructure
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The capital goods usually provided by the public sector for use by citizens and firms (highways, bridges, transit, airports, etc.)
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Inverse Relationship
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The relationship between two variables that change in opposite directions
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Macroeconomics
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The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy.
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Microeconomics
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the part of economics concerned with decision making by individual customers, workers, households, and business firms
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Mixed Capitalism
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An economic system characterized by largely private ownership of factors and production, market allocation of resources, and decentralized decisions. But goverment plays a substantial economic and regulatory role
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Normative Economics
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The part of economics involving value judgments about what the economy should be like; OPINION
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Opportunity Cost
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The amount of other products that must be forgone or sacrificed to produce a unit of a product
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Personal Distribution of Income
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The manner in which the economy's personal or disposable income is divided among different income classes or different households or families
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Positive Economics
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The analysis of facts or data to establish scientific generalizations about economic behavior
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Post Hoc, ergo
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The false belief that when one event precedes another, the first event must have caused the second
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Private Sector
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The households and business firms of the economy
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Public Sector
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Part of economy that contains all GOVERNMENT entities
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Production Possibilities
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A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed
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Pure Capitalism
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an economic system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets- NO GOVERNMENT
(laissez faire)
(laissez faire)
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Self-Interest
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That which each firm, property owner, worker, and consumer believes is best for itself and seeks to obtain.
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Socialism
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government controls major industries, private owners control consumer goods. Combines free market and planned economic systems
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Subsidy
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A payment of funds (or g/s) by a government, firm, or household for which it receives no good or service in return.
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Tradeoffs
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The sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service
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Traditional Economy
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System that relies on customs, history, and time-honored beliefs
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