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106 Cards in this Set

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What is Absolute Advantage?
The ability to produce more units of a good or service than some other producer, using the same quantity of resources.
ability
What is Adaptive Expectations?
Expectations about inflation or other economic events.
inflation
What is Aggregate Demand (AD)?
A schedule (or graph) that shows the value of output (real GDP) that would be demanded at different price levels.
graph
What is Aggregate Supply (AS)?
A schedule (or graph) that shows the value of output(real GDP) that would be produced at different price levels. In the long run, the schedule shows a constant level of real GDP at all price levels, determined by the economy’s productive capacity at full employment. In the short run, the aggregate supply schedule may show different levels of real GDP as the price level changes.
supply graph
What is Alternative?
One of many courses of action that might be taken in a given situation.
action
What is Assumptions?
Beliefs or statements presupposed to be true.
beliefs
What is Balance of Payments?
The record of all transactions (in goods, services, physical and financial assets) between individuals, firms, and governments of one country with those in all other countries in a given year, expressed in monetary terms.
transaction
What is Balance of Trade?
The part of a nation’s balance of payments accounts that deals only with its imports and exports of goods (also called merchandise or “visibles”). When “invisibles,” or services, are added to the balance of trade, the result is a nation’s balance on the current account section of its balance of payments.
national balance
What is Barriers to Entry?
Factors that restrict entry into an industry and give cost advantages to existing firms. Examples would include the large size of existing firms, control over an essential resource or information, and legal rights such as patents and licenses.
factors
What is Barter?
Trading a good or service directly for another good or service, without using money or credit?
trade
What is Benefit?
The advantage(s) of a particular course of action as measured by good feeling, dollars, or number of items.
advantage
What is Budget Deficit?
Refers to national budgets; occurs when government spending is greater than government income from taxes and tariffs in a given year. A yearly deficit adds to the public debt.
national budget
What is Budget Surplus?
Refers to national budgets; occurs when government income is greater than government spending in a given year.
greater than
What is Buisness Cycles?
luctuations in the overall rate of national economic activity with alternating periods of expansion and contraction; these vary in duration and degrees of severity; usually measured by real gross domestic product (GDP).
fluctuations
What is Capital?
Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools, and equipment.
resources
What is Competition?
Attempts by two or more individuals or organizations to acquire the same goods, services, or productive and financial resources. Consumers compete with other consumers for goods and services. Producers compete with other producers for sales to consumers.
attempts
What is Compound Interest?
Interest that is earned not only on the principal but also on the interest already earned
principal
What is Consumer Price Index?
A price index that measures the cost of a fixed basket of consumer goods and services and compares the cost of this basket in one time period with its cost in some base period. Changes in the CPI are used to measure inflation.
fixed
What is Consumer Surplus?
The difference between the price a consumer would be willing to pay for a good or service and what that consumer actually has to pay.
difference
What is Consumption?
People who use goods and services to satisfy their economic wants
satisfy
What is Cost?
The disadvantages of a particular course of action as measured by bad feeling, dollars, or numbers of items.
disadvantage
What is Credit?
The opportunity to borrow money or to receive goods or services in return for a promise to pay later.
borrow
What is Debt?
Money owed to someone else.
owe
What is Deflation?
A sustained decrease in the average price level of all the goods and services produced in the economy.
decrease
What is demand?
A schedule (or graph) showing how many units of a good or service buyers are willing and able to buy at all possible prices during a period of time.
schedule
What is Distribution?
The allocation or dividing up of the goods and services a society produces.
dividing
What is Division of Labor?
An arrangement in which workers perform only one or a few steps in a larger production process (as when working on an assembly line).
arrangement
What is Economic Functions of Government?
In a market economy, government agencies establish and maintain a legal system to regulate both commercial and social behavior, promote competition, respond to market failures by providing public goods and adjusting for externalities, redistribute income, and establish macroeconomic stabilization policies. To perform these functions, governments must shift resources from private uses by taxing and/or borrowing.
system
What is Economic Growth?
An increase in real output as measured by real GDP or per capita real GDP.
increase
What is Economic Incentives?
Factors that motivate and influence the behavior of individuals and organizations, including firms and government agencies. Prices, profits, and losses are important economic incentives in a market economy.
motivate
What is Economics?
The study of how people, firms, and societies choose to use scarce resources.
study
What is Elasticity?
Price elasticity of supply.
price
What is Exports?
Goods and services produced in one nation and sold to consumers in other nations.
nations
What is Federal Reserve?
The central bank of the United States. Its main function is controlling the money supply through monetary policy.
central
What is Fiscal Poicy?
Changes in the expenditures or tax revenues of the federal government, undertaken to promote full employment, price stability, and reasonable rates of economic growth.
change
What is Foreign Exchange Market?
Market where demand for and supply of foreign currencies determines exchange rates.
demand
What is Goods?
Tangible objects that satisfy economic wants.
objects
What is Gross Domestic Product?
The market value of all final goods and services produced in a country in a calendar year.
value
What is Human Capital?
The health, education, experience, training, and skills of people.
skills
What is Hyper Inflation?
A very rapid rise in the overall price level.
rapid
What is Imports?
Purchases of foreign goods and services; the opposite of Exports.
purchase
What is Incentive?
Any reward or benefit, such as money or good feeling, that motivates choices and behaviors.
reward
What is Inflation?
A rise in the general or average price level of all the goods and services produced in an economy.
rise
What is Income?
Payments earned by households for selling or renting their productive resources. For example, workers receive wage or salary payments in exchange for their labor.
earned
What is Interest?
Payments for the use of real or financial capital over some period of time; paid by those who use the resources to those who own them, as in mortgage payments paid by a borrower to a lender.
payment
What is Investment?
Purchase of capital goods (including machinery, technology, or new buildings) used to make consumer goods and services.
capital
What is Keynesian Theory
The macroeconomic theory holding that business cycles are caused by changes in aggregate demand and that such cycles can and should be influenced by fiscal and monetary policy undertaken to promote economic stability.
macroeconomic
What is Labor?
The quantity and quality of human effort available to produce goods and services.
quantity
What is Labor Force?
The people in a nation who are aged 16 or over and are employed or actively looking for work.
work
What is Law of Diminishing Marginal Returns?
Describes a phenomenon observed in all short-run production processes, when at least one input (usually capital)is fixed. As more and more units of a variable input (usually labor) are added to the fixed input, the additional (marginal) output associated with each increase in units of the variable input will eventually decline. In other words, successive increases in a variable factor of production added to fixed factors of production will result in smaller increases in output.
processes
What is Macroeconomic Equilibrium?
The equilibrium level of output and the price level where aggregate demand equals aggregate supply.
level
What is Macroeconomics?
The study of economics concerned with the economy as a whole, involving aggregate demand, aggregate supply, and monetary and fiscal policy.
study
What is Monetaris Theory?
A macroeconomic theory holding that the main cause of changes in the business cycle are changes in money supply.
theory
What is the Definition of Money?
Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value, and a unit of account; allows people to compare the relative economic value of different goods and services.
anything
What is Monopoly?
A market structure in which a single seller produces sells all the units of a good or service in a particular market, and where the barriers to new firms entering the market are very high.
market
What is National Debt?
The total amount owed by the national government to those from whom it has borrowed to finance the accumulated difference between annual budget deficits and annual budget surpluses; also called public debt.
difference
What is National Resources?
“Gifts of nature” that can be used to produce goods and services; for example, oceans, air, mineral deposits, virgin forests, and actual fields of land. When investments are made to improve fields of land or other natural resources, those resources become, in part, capital resources.
nature
What is Nonexclusion?
A property of certain goods and services such that (once the goods or services are provided) they cannot be denied to or withheld from people who have not paid for the goods or services; examples include street lights or national defense.
property
What is Normal rate of profit?
Profits just high enough to compensate producers for the explicit and implicit costs (including opportunity costs) they incur in producing a particular good or service, without leading to any net entry or exit by producers in that market. Also called normal profits. Normal profits are an economic cost of production; they mark a point at which any lower level of profit would lead a producer to pursue some other use of his or her resources.
compensate
What is Oligopoly?
A market structure in which a few, relatively large firms account for all or most of the production or sales of a good or service in a particular market, and where barriers to new firms entering the market are very high. Some oligopolies produce homogeneous products; others produce heterogeneous products.
structure
What is Opportunity Cost?
The forgone benefit of the next best alternative that must be given up when scarce resources are used for one purpose instead of another.
alternative
What is Poverty?
The state of being poor, variously defined. Sometimes defined relatively — by reference, for example, to the average household income in a nation or region. Sometimes defined absolutely — by reference, for example, to the income needed to provide for adequate food, housing, and clothing in a nation or region.
state
Whta is Price?
The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.
amount
What is Price Elasticity of Demand?
The responsiveness of the quantity demanded of a good or service to changes in its price. The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.
percentage
What is Price Elasticity of Supply?
The responsiveness of the quantity supplied of a good or service to changes in its price. The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.
change
What is Producers?
People and firms that use resources to make goods and services.
firms
What is Profit?
Income received for entrepreneurial skills and risk taking, calculated by subtracting all of a firm’s explicit and implicit costs from its total revenues.
income
What is is Property Rights?
Legal protection for the boundaries and possession of property. Assigning of property rights to individuals, collectives, or governments will depend on the economic system.
legal
What is Public Goods?
Goods for which use by one person does not reduce the quantity of the good available for others to use, and for which consumption can not be limited to those who pay for the good.
not reduce
What is Public Choice Analysis?
The study of decision making as it affects the organization and operation of government and other collective organizations. Involves the application of economic principles to political science topics.
decision
What is Purchasing Power?
The amount of goods and services that a monetary unit of income can buy.
monetary
What is Quotas?
In international trade, limits on the quantity of a product that may be imported or exported, established by government laws or regulations; in command economies, more typically a production target assigned by government planning agencies to the producers of a good or service.
international
What is Resources?
The three (or four) basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.
basic
What is Recession?
A decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months).
decline
What is Salary?
Payments for labor resources; unlike wages, not explicitly based on the number of hours worked. See also Wages.
labor
What is Savings?
Setting aside income, or money, for a future use.
save
What is Scarcity?
The condition that exists when human wants exceed the capacity of available resources to satisfy those wants; also a situation in a resource has more than one valuable use. The problem of scarcity faces all individuals and organizations, including firms and government agencies.
condition
What is Secured Debt?
Credit with collateral (a house or a car, e.g.) for the lender.
credit
What is Services?
Activities performed by people, firms, or government agencies to satisfy economic wants.
activities
What is Shared Consumption?
A property of a good or service such that it can be used by many without diminishing another’s ability to consume the same good; examples include street lights or radio broadcasts.
many
What is Shortage?
The situation that results when the quantity demanded for a product exceeds the quantity supplied. Generally happens because the price of the product is below the market equilibrium price.
exceeds
What is Special Interest Group?
An organization of people with a particular legislative concern. They work together to gather information, lobby politicians, and publicize their concern.
organization
What is Supply?
A schedule (or graph) showing how many units of a good or service producers are willing and able to sell at all possible prices during a period of time.
units
What is Surplus?
The situation that results when the quantity supplied of a product exceeds the quantity demanded. Generally happens because the price of the product is above the market equilibrium price.
exceeds quantity
What is Tariff?
A tax on an imported good or service.
import
What is Taxes?
Compulsory payments to governments by households and businesses.
compulsory
What is Total Revenue?
All money received from selling a good or service; the price times the quantity sold of each item.
recieved
What is Trade?
Voluntary exchange of goods and services for money or other goods and services.
exchange
What is Traditional Economy?
An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution.
customs
What is Unemployment?
Unemployment exists when people who want to work in jobs they are qualified to do at current wage rates are not able to find jobs, or are waiting to begin a new job, or are actively looking for work but do not have the skills required to fill the jobs that are currently available.
work jobs
What is Shortage?
The situation that results when the quantity demanded for a product exceeds the quantity supplied. Generally happens because the price of the product is below the market equilibrium price.
exceeds
What is Special Interest Group?
An organization of people with a particular legislative concern. They work together to gather information, lobby politicians, and publicize their concern.
organization
What is Supply?
A schedule (or graph) showing how many units of a good or service producers are willing and able to sell at all possible prices during a period of time.
units
What is Surplus?
The situation that results when the quantity supplied of a product exceeds the quantity demanded. Generally happens because the price of the product is above the market equilibrium price.
exceeds quantity
What is Tariff?
A tax on an imported good or service.
import
What is Taxes?
Compulsory payments to governments by households and businesses.
compulsory
What is Total Revenue?
All money received from selling a good or service; the price times the quantity sold of each item.
recieved
What is Trade?
Voluntary exchange of goods and services for money or other goods and services.
exchange
What is Traditional Economy?
An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution.
customs
What is Unemployment?
Unemployment exists when people who want to work in jobs they are qualified to do at current wage rates are not able to find jobs, or are waiting to begin a new job, or are actively looking for work but do not have the skills required to fill the jobs that are currently available.
work jobs
What is Unemployment Rate?
The percentage of the labor force that is unemployed.
percentage
What is Unsecured Debt?
Debt without collateral; credit card debt, for example.
collateral
What is Utility?
An abstract measure of the satisfaction consumers derive from consuming goods, services, and leisure activities.
abstract
What is Variable Cost?
Costs that change as a firm’s level of output changes. See also Fixed costs.
costs
What is Wage
Payments for labor services that are directly tied to time worked, or to the number of units of output produced.
payments
What is Total Cost?
All costs associated with producing a good of service; the sum of fixed costs plus variable costs.
produce