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ECON 102 > Terms > Flashcards

Terms Flashcards

(81 cards)

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1
Q

Scarcity

A

The limited nature of society’s resources

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2
Q

Economics

A

Study of how society manages its scarce resources

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3
Q

Efficiency

A

The property of society getting the most it can from its scarce resources

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4
Q

Equity

A

The property of distributing economic prosperity fairly among the members of society

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5
Q

Opportunity Cost

A

Whatever must be given up to obtain some item

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6
Q

Rational People

A

Those who systematically & purposefully do the best they can to achieve their objectives

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7
Q

Marginal Changes

A

Small incremental adjustments to a plan of action

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8
Q

Incentive

A

Something that induces a person to act

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9
Q

Market Economy

A

An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

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10
Q

Property Rights

A

The ability of an individual to own and exercise control over scarce resources

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11
Q

Market Failure

A

A situation in which a market left on its own fails to allocate resources efficiently

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12
Q

Externality

A

The impact of one person’s actions on the well-being of a bystander

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13
Q

Market Power

A

The ability of a single economic actor to have a substantial influence on market prices

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14
Q

Productivity

A

The quantity of goods and services from each hour of a worker’s time

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15
Q

Inflation

A

An increase in the overall level of prices in the economy

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16
Q

Business Cycle

A

Fluctuations in economic activity such as employment and production

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17
Q

Circular Flow Diagram

A

A visual model of the economy that shows how dollars flow through markets among households and firms

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18
Q

Production Possibilities Frontier

A

A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

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19
Q

Macroeconomics

A

The study of economy wide phenomena, including inflation, unemployment, and economic growth

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20
Q

Microeconomics

A

The study of how households and firms make decisions and how they interact in market

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21
Q

Positive Statements

A

Claims that attempt to describe the world as it is

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22
Q

Normative Statements

A

Claims that attempt to prescribe how the world should be

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23
Q

Market

A

A group of buyers and sellers of a particular good or service

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24
Q

Competitive Market

A

A market in which there are many buyers and many sellers so that each has a negligible impact on the market price

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25
Monopoly
A market with only one seller that sets the price
26
The Demand Curve
The relationship between price and quantity demanded
27
Quantity Demanded
The amount of a good that buyers are willing and able to purchase
28
Law of Demand
The claim that other things equal the quantity demanded of a good falls when teh price of the good rises
29
Demand Schedule
A table that shows the relationship between the price of a good and the quantity demanded
30
Demand Curve
A graph of the relationship between the price of a good and the quantity demanded
31
Market Demand
Sum of all the individual demands for a particular good or service
32
Normal Good
A good for which, other things equal, an increase in income leads to an increase in demand
33
Inferior Good
A good for which, other things equal, an increase in income leads to a decrease in demand
34
Substitutes
Two goods for which an increase in the price of one leads to an increase in the demand for the other
35
Complements
Two goods for which an increase in the price of one leads to a decrease in the demand for the other
36
Quantity Supplied
The amount of a good that sellers are willing and able to sell
37
Law of Supply
The claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
38
Supply Schedule
A table that shows the relationship between the price of a good and the quantity supplied
39
Consumer Price Index (CPI)
A measure of the overall cost of the goods and services bought by a consumer
40
Inflation Rate
The percentage change in the price index from the preceding period
41
Core Inflation
A measure of the underlying trend of inflation
42
Indexation
The automatic correction of a dollar amount for the effects of inflation by law or contract
43
Nominal Interest Rate
The interest rate as usually reported without a correction for the effects of inflation
44
Real Interest Rate
The interest rate corrected for the effects of inflation
45
Supply Curve
A graph of the relationship between the price of a good and the quantity supplied
46
Market Supply
Sum of the supplies of all sellers
47
Input Prices
When the price of an input into a good rises, the good becomes less profitable and is produced less, supply is negatively related to the price of inputs
48
Technology
The reducing of a firms cost through technology advances increases supply
49
Expectations
Supply may decrease if price is expected to rise int he future and store current production
50
Number of sellers
Supply would fall if there were less overall sellers
51
Equilibrium
A situation in which the price has reached the level where quantity supplied equals quantity demanded
52
Equilibrium Price
The price that balances quantity supplied and quantity demanded
53
Equilibrium Quantity
The quantity supplied and the quantity demanded at the equilibrium price
54
Surplus
A situation in which quantity supplied is greater than quantity demanded
55
Shortage
A situation in which quantity demanded is greater than quantity supplied
56
Law of Supply and Demand
The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
57
Gross Domestic Product (GDP)
The market value of all final goods and services produced within a country in a given period of time
58
Consumption (C)
Spending by household on goods and services with the exception of purchases of new housing
59
Investment (I)
Spending on capital equipment, inventories and structures, including household purchase of new housing
60
Government Purchases (G)
Spending on goods and services by local, territorial, provincial and federal governments
61
Net Exports (NX)
The value of a nation's exports minus the value of its import, also called the trade balance
62
Nominal GDP
The production of goods and services valued at current prices
63
Real GDP
The production of goods and services valued at constant prices
64
GDP deflator
A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
65
Productivity
The quantity of goods and services produced from each hour of a worker's time
66
Physical Capital
The stock of equipment and structures that are used to produce goods and services
67
Human Capital
The knowledge and skills workers acquire through education, training and experience
68
Natural Resources
The inputs into the production of goods and services that are provided by nature, such as land, rivers and mineral deposits
69
Technological Knowledge
Society's understanding of the best ways to produce goods and services
70
Diminishing Returns
The property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
71
Catch-up Effect
The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
72
Foreign Direct Investment
A capital investment that is owned and operated by a foreign entity
73
Foreign Portfolio Investment
An investment that is financed with foreign money but operated by domestic residents
74
Externality
The effect of one person's actions on the well-being of a bystander
75
Brain Drain
The emigration of highly educated workers to rich countries
76
Property Rights
The ability of people to exercise authority over the resources they own
77
Inward-oriented Policies
Raising productivity and living standards within the country by avoiding interaction with the rest of the world
78
Outward-Oriented Policies
Integration of countries into the world economy
79
Public Good
Once one person discovers an idea, the idea enters society's pool of knowledge and other people can freely use it
80
Thomas Malthus
Argued that an increasing population would strain society's resources and keep everyone permanently in poverty
81
Michael Kremer
Argued that the growth of the world population also grows technological progress and economic prosperity

ECON 102 (2 decks)

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