Key Terms Week One Flashcards
Define centrally planned economy
An economic system where a government body makes economic decisions regarding the production and distribution of goods
Define free market
Desicions made without government intervention, one where voluntary exchange and laws of supply and demand are the sole basis of the economic system
Define scarcity
Refers to resources being finite and limited
= must decide how and what to produce from these limited resources
= constant opportunity cost involved in making economic deductions
Define opportunity cost
The next best alternative foregone when an economic descicion is made
Define basic economic problem
In an economy there are scarce resources while members of the economy have infinite wants
Define macroeconomics
Branch of economics that looks at performance and behaviour of an economy as a whole rather than indivual people, markets or businesses
Define microeconomics
- Branch of economics that studies behaviour of individuals and firms in the market
- Focuses on everyday life and individual choices and effects
Positive statements
An objective fact based statement which can be tested against evidence
Normative statement
Subjective statement based upon an opinion which can’t b tested
Value judgment
Judgment about what’s good or bad etc
Social science
Scientific study of human interaction and social relationships
Difference of social and natural science
Natural
- more experimental data
- deals with physical world
Social
- financial choices
- human behaviour
Both
- tests
- hypothesis
- conclusion
- review data and graphs etc
