Econ-Chapter 3 Flashcards Preview

Fall 2016 > Econ-Chapter 3 > Flashcards

Flashcards in Econ-Chapter 3 Deck (22):
1

What is true about money?

It only makes transactions easier and stores value.

2

Dollars keep track of what

Economic activity

3

How is value created?

Through production and through trade

4

Production process

Turns inputs into consumable outputs

5

Consumable Outputs

Are goods and services

6

Resources/inputs

Natural Resources/ Land
Labor
Capital
Entrepreneurship

7

To make an iPhone it takes a huge economic engine, connected by the price system that conveys..

the necessary information about the scarcity of each resource , the preferences of consumers, and provides incentives for working together.

8

Technology

The way that inputs are combined to produce output

9

Make Work Fallacy

The idea that jobs are valuable, wether or not the labor's production adds value.

10

As resources are released from producing one good, they become available to produce others, which makes us..

wealthier

11

Production Possibilities Frontier (PPF) assumes three things:

Only two goods are produced over some time period
Some fixed amount of resources is used
A given technology is used

12

Law of Increasing Opportunity Cost (LIOC)

As more of one good is produced, the opportunity cost of producing a unit of that good rises, in terms of theater good which must be sacrificed.

13

The PPF only shows

Possibilities

14

Wealth is about

Having valuable stuff.

15

Authoritarian Economy

Decisions will reflect the values of those taking part in the economy.

16

Market Economy

All choices are based on value

17

Human Capital

Individuals upgrade their labor by education and training.

18

Income and Wealth depend on these three things:

Quantity of resources
Quality of resources
Freedom to use those resources

19

Those who can provide value..

are able to consume some of that value

20

Those who cannot provide as much value have ..

Less to consume

21

Invisible hand

To promote an end which was no part of his intentions, used by Adam Smith

22

Economic Growth

An expansion of an economy's productive capabilities .