1ST TEST Flashcards
(49 cards)
the part of economics concerned with single factors and the effects of individual decisions
Microeconomics
the branch of economics that deals with the structure, performance, behavior, and decision-making of the whole, or aggregate, economy
Macroeconomics
Monetary policy refers to the actions of central banks, including the Federal Reserve, to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth. Fiscal policy refers to the tax and spending policies of a national government.
Monetary policy and fiscal policy
What is economics?
The study of scarcity, the study of how people use resources and respond to incentives, or the study of decision-making.
Why Models?
A model is a simplified representation of a real situation that is used to better understand real-life situations…
What are 2 important models?
-PPF (Production possibility frontier)
and
-Circular-flow diagram
Why are PPF curved?
Opportunity costs
What is the circular flow diagram?
The circular flow diagram is a model that explains the general movement of money on a day-to-day basis through the relationship that exists between the main economic agents, such as companies, families and the public sector.
An individual has a ____ _____ in producing a good or service if the opportunity cost of producing the good is lower for the individual than other people.
Comparative Advantage
An individual has an ______ ______ in an activity if they can do it better than other people. Having an absolute advantage is not the same as having comparative advantage.
Absolute Advantage
The difference between positive and normative economics:
-Positive economics is the branch of economic analysis that describes the way the economy actually works
-Normative economics makes prescriptions about the way the economy should work
What’s a competitive market?
Many buyers and sellers
Same good or service
Five Key Elements of a Demand and Supply Model
- Demand curve
- Supply curve
- Demand and supply curve shifts
- Market equilibrium
- Changes in the market equilibrium
A ___ _____ shows how much of a good or service consumers will want to buy at different prices.
Demand Schedule
Demand Curve:
The graphical representation of the demand schedule; it shows how much of a good or service consumers want to buy at any given price.
A __ _ _ _ ___ is change in the quantity demanded at any given price represented by the change of the original demand curve to a new position, denoted by a new demand curve.
shift of the demand curve
Shape of demand curve
A linear demand curve typically slopes downward as it moves to the right, demonstrating the inverse relationship between the quantity of products demanded (x-axis) and its price (on the y-axis) at a particular point in time.
Causes a demand curve to shift:
Substitutes, complements, changes in income, change in tastes, and change in expectations
The ___ _____ ______ is the horizontal sum of the individual demand curves if all consumers in that market.
Market Demand Curve
A ________ _______ shows how much of a good or service would be supplied at different prices.
Supply Schedule
A ____ ___ ____ ___ ___ is a change in the quantity supplied.
Shift in the Supply Curve
The ___ ____ ___is the horizontal sum of the individual supply curves of all firms in that market.
Market supply curve
What causes a Supply Curve to shift?
-Changes in input
-Changes in the prices of related goods and services
-Changes in technology
-Changes in expectations
-Changes in the number of producers
In a competitive market: when the quantity demanded of a good equals the quantity supplied of that good
Equilibrium
