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Flashcards in Intro to macro Deck (19)
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1
Q

Economics

A

The study of how individuals and societies choose to allocate scarce resources.

It’s a social science.

2
Q

Scarcity

A

Scarcity:

fact that there is a limited amount of resources to satisfy unlimited wants.

3
Q

economic resources

A

economic resources:

also called the factors of production; these are:

land (natural resources such as minerals and oil),

labor (work contributed by humans),

capital (tools, equipment, and facilities), and

entrepreneurship (the capacity to organize, develop, and manage a business)

that individuals and businesses use in the production of goods and services.

4
Q

models

A

Models

graphical and mathematical tools created by economists to better understand complicated processes in economics.

5
Q

ceteris paribus

A

a latin phrase meaning “all else equal”.

6
Q

agent

A

some entity making a decision; this can be an individual, a household, a business, a city, or even the government of a country.

7
Q

incentives

A

rewards or punishments associated with a possible action; agents make decisions based on incentives.

8
Q

rational decision making

A

rational decision making

an agent is “rational” if they use all available information to choose an action that makes them as well off as possible; economic models assume that agents are rational.

9
Q

What is positive analysis?

A

Positive analysis is:

analytical thinking about objective facts and cause-and-effect relationships that are testable, such as how much of a good will be sold when a price changes.

10
Q

normative analysis

A

normative analysis

unlike positive analysis, normative analysis is subjective thinking about what we should value or a course of action that should be taken, such as the importance of environmental factors and the approach to managing them.

11
Q

What is microeconomics?

A

the study of the interactions between buyers and sellers in individual markets for particular goods and services.

the study of competitive structure of markets.

the study of markets for resources.

12
Q

What is macroeconmics?

A

Macroeconomics is:

the study of aggregates

the study overall commercial output

the study of health of nations; including the analysis of factors such as: unemployment, inflation, economic growth and interest rates.

13
Q

economic aggregates

A

economic aggregates are:

measurables such as :

unemployment rate,

rate of inflation,

and national output

that summarize all markets in an economy, rather than individual markets;

economic aggregates are frequently used to measures the economic performance of an economy.

13
Q

economic aggregates

A

economic aggregates

measures such as the unemployment rate, rate of inflation, and national output that summarize all markets in an economy, rather than individual markets; economic aggregates are frequently used as measures of the economic performance of an economy.

14
Q

economic aggregates

A

economic aggregates

measures such as the unemployment rate, rate of inflation, and national output that summarize all markets in an economy, rather than individual markets; economic aggregates are frequently used as measures of the economic performance of an economy.

15
Q

Common Misconceptions

A

Economic doesn’t study the:

Stock market

How to run a business

16
Q

Economics essential assumption

A

Economics essential assumption is:

People and business will always act in their best interests. Not always true in the “real world”. In the “real world” people, businesses and entire societies can be highly irrational.

17
Q

Behavioral Economics

A

Seeks to understand why humans choose to make economically “irrational” choices in their decision making.

18
Q

Capital

A

Already produced goods (tools, machinery, equipment, and physical infrastructure) that are used in the production of other goods or services.

Money borrowed to start a business is not capital in economics.