Introduction to Econ Terms Flashcards
(12 cards)
define economics
the study of how individuals and societies choose to allocate scarce resources.
define scarcity
the fact that there is a limited amount of resources to satisfy unlimited wants.
define economic resources
also called the factors of production; these are the 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.
define economic models
graphical and mathematical tools created by economists to better understand complicated processes in economics.
translate ceteris paribus
all else equal
define agent
some entity making a decision; this can be an individual, a household, a business, a city, or even the government of a country.
define 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.
define positive analysis
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.
define 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.
what is microeconomics?
the study of the interactions of buyers and sellers in the markets for particular goods and services
what is macroeconomics
the study of aggregates and the overall commercial output and health of nations; includes the analysis of factors such as unemployment, inflation, economic growth and interest rates.
define 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.
