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23 Cards in this Set
- Front
- Back
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What two roles do economists play? |
scientists and policy advisors |
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the dispassionate development and testing of theories about how the world works |
scientific method |
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simplify the complex world, make it easier to understand |
assumptions |
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a highly simplified representation of a more complicated reality |
model |
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a visual model of the economy |
circular-flow diagram |
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The circular-flow diagram shows what two things? |
inputs and outputs, and dollars |
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What are the two types of "actors" in the circular-flow diagram? |
households, and firms |
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Market for goods and services |
outputs |
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Market for factors of production |
inputs |
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refers to created resources such as machines and buildings |
physical capital |
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refers to the educational achievements and skills of workers |
human capital |
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the resources the economy uses to produce goods and services |
factors of production |
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What are the four primary resources that must be allocated by society? |
labor capital, land, and natural resources |
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is a graph that shows the combinations of two goods the economy can possibly produce (max output combination) |
production possibilities frontier (ppf) |
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opp. cost of the good on the horizontal axis in terms of the good on the vertical axis |
slope of ppf |
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If ___________ ___________ of a good _________ as the economy produces more of the good, ppf is bow-shaped |
opportunity cost, rises |
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What shifts the ppf outward? |
economic growth |
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is the study of how households and firms make decisions and how they interact in markets |
microeconomics |
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is the study of economy-wide phenomena, including inflation, unemployment, and economic growht |
macroeconomics |
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approach to understand behavior and operation of economics systems |
positive economics |
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approach to analyze outcomes and economic behavior, evaluates them as good or band, and may prescribe courses of action |
normative economics |
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Positive statements that attempt to describe the world as it is are made by? |
scientists |
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Normative states that attempt to prescribe how the world should be are made by? |
policy advisors |
