Chapter 1 Flashcards
(23 cards)
Circular flow chart
A diagram that views the economy as consisting of households and firms interacting with goods and service markets and labor markets
Command economy
An economy where economic decisions are passed down from government authority and where the government owns resources
Division of labor
The way in which different workers divide required tasks produce a good/service
Economics
Study of how humans make decisions under conditions of scarcity
Economies of scale
Average cost of producing each individual unit decreases as total output increases(producing more costs less)
Exports
Products(goods/services) made domestically sold abroad
Fiscal policy
Economic policies that involve government spending and taxes
Globalization
Trend in which buying and selling in markets has increasingly cross national borders
Goods and services markets
A market where firms are sellers of what they produce and households are buyers
GDP Gross Domestic Product
Measure of the size of total production and economy
Imports
Products(goods/services) made abroad sold domestically
Labor market
The market in which households sell their labor as workers to business ,firms, or other employers
Macroeconomies
The branch of economics that focuses on broad issues such as growth , unemployment , inflation, and trade balance
Market
Interaction between potential buyers and sellers; a combination of demand and supply
Market economy
An economy where economic decisions are decentralized. Private individual’s own resources ,and businesses supply goods and services based on demands
Microeconomics
Branch of economics that focuses on actions of particular agents within the economy(Business firms, workers ,households)
Model/theory
Representation of an object or situation that is simplified while including enough key features to help us understand the object or situation
Monetary policy
Policy that involves altering the level of interest rates , the availability of credit in the economy, and the extent of borrowing
Private enterprise
System where private individuals or groups are private individuals own and operate means of production(resources and businesses)
Scarcity
When human wants for goods/services exceed available supply
Traditional economy
Typically an agricultural economy where things are done the way they have always been done
Underground economy
A market where buyers and sellers make transactions in violation of one or more government regulations
Specialization
When workers or firms focus on a particular task for which they are well suited within the overall production process
