INTRO TO ECONOMICS Flashcards
The economy
All the production and exchange activities that take place everyday.
Economic activity
The buying and selling that goes on in an economy over a period of time.
Economic system
The way in which resources are organized and allocated in order to provide for the needs of the economy’s citizens.
Planned economic system
An economic system in which economic decisions are made by a central authority rather than by market participants.
Pure market/capitalist system
A free, private economic system that allows voluntary and competing private individuals to plan, produce, and trade without government interference.
A mixed market economy
A mixed economy is an economic system wherein free markets and government involvement are able to coexist when it comes to resource distribution, commerce, and trade.
Scarcity
Society has limited resources and therefore cannot produce all the goods and services people wish to have.
Economics (in relation to scarcity)
- study of how society manages its scarce resources
- study of people ‘in the ordinary business of life’
Microeconomics
Study of how households and firms make decisions and how they interact in markets.
Macroeconomics
Study of economy-wide phenomena, including inflation, unemployment and economic growth.