Economics

Front 1

Real GDP

Back 1

The sum of Price*Quantity with base year.
A GDP that has been deflated or inflated to reflect changes.

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Nominal GDP

Back 2

The sum of Price*Quantity without a base.
A GDP based on the prices that prevailed when the out put was produced.

Front 3

Peak

Back 3

Temporary Maximum
Near full employment
Output to economy's capacity
Prices likely to rice

Front 4

Recession

Back 4

Decline in output, income and employment
6+ months

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Trough

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Depression
Output bottom out @ lowest level
Short or long

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Recovery

Back 6

GDP, income and employment rise
Will reach near FE.
Spending more rapid than production-Inflation occurs.

Front 7

Unemployment Rate

Back 7

1

Front 8

Labor Force

Back 8

1

Front 9

Frictional Unemployment

Back 9

11

Front 10

Structural Unemployment

Back 10

1

Front 11

Cyclical Unemployment

Back 11

1

Front 12

Inflation

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Price Rise

Front 13

Production Possibilities Curve

Back 13

Point on the production possibilities curve represent some maximum output of the two products.
Points inside the curve reflect less output-not desirable.

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Opportunity Cost

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The amount of other products that must be forgone or sacrificed to produce a unit of a product.

Front 15

Law of increasing opportunity cost

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The principle that as the production of a good increases, the opportunity cost of producing an additional unit rises.

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Short Run

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A period of time in which resources are fixed. Margin productivity. Full employment, fixed resources, Fixed technology, and two goods.

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Marginal Benefit

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The extra (additional) benefit of consuming 1 more unit of some good or service; the change in total benefit when 1 more unit is consumed.

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Marginal Cost

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The extra (additional) cost of producing 1 more unit of output; equal to the change in total cost divided by the change in output (and, in the short run, to the change in total variable cost divided by the change in output).

Front 19

Production Efficiency

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The production of a good in the least costly way.
Full employment
Technology

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Allocation Efficiency

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The output of each product at which its marginal cost and price are equal.

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Utility

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The pleasure obtained from a good or service.

Front 22

Fundamental law of economics

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Marginal benefit should be greater than marginal cost.

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Optimal Output

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Marginal Benefit = Marginal Cost

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Dis-utility

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Oppose to utility.

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Public Good

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Robots
Guns
Capital goods

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Private Good

Back 26

Butter
Pizzas
Consumer goods

Front 27

Rational Behavior

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Behavior design to maximize total utility.

Front 28

Military Intervention

Back 28

1

Front 29

Rational Ignorance

Back 29

Decision to maximize output. Along the way, mistakes will happen.

Front 30

Supply

Back 30

g

Front 31

Demand

Back 31

g

Front 32

The Market

Back 32

g

Front 33

Equilibrium

Back 33

g

Front 34

Ceteris Paribus (Law of Demand)

Back 34

g

Front 35

Land

Back 35

b

Front 36

Labor

Back 36

b

Front 37

Capital Goods

Back 37

g

Front 38

Entrepreneurship

Back 38

g

Front 39

Capitalism (Market)

Back 39

Private ownership
Decentralized planning
Safety Net
Equality of opportunity
BAD
Fails in public goods and externalizes
Instability
Insecurity
Inequality
GOOD
Freedom
Least cost

Front 40

Communism/Socialism (Government)

Back 40

Government ownership
Central planning
Gini Coeff=0
Social Welfare
High Taxes
GOOD
Stability
Security
Equality

Front 41

Terms of Trade

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The exchange ratio at which two countries trade two products.

Front 42

Comparative Advantage

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Producer with advantage to produce a product at a low opportunity cost.

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David Ricardo

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It is a advantageous for a country to specialize and trade with another country even if it is more productive in all economic activities that that other country.

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Protective Tariffs

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A tariff designed to shield domestic producers of a good or service from the competition of foreign producers.

Front 45

Free Trade

Back 45

The absence of artificial (government imposed) barriers to trade among individuals and firms in different nations.

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GATT

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General agreement on tariffs and trade
Non discriminatory trade treatment for all member nations.
Reduction of tariffs by negotiations.
Elimination of import quotas.

Front 47

WTO

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World Trade Organization
Oversees trade agreements
Rules trade disputes
Provides forums

Front 48

Smoot-Hawley Tariff Act

Back 48

"trade war"
Nations worse off.
Possible cause of great depression.

Front 49

Tariff

Back 49

Excise taxes or "duties" on the dollar values of physical quantities of imported goods.

Front 50

NAFTA

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North American Free Trade Agreement
Mex, U.S, Can
Tariffs eliminated
Free trade zone

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Importance of being unimportant

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Poor countries benefit greatly when they trade with rich countries.

Front 52

Trading Possibilities Line

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The amount of products a nation can obtain by specializing in one product and trading for another.

Front 53

EU

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European Union
Free trade zone
Tariffs reduced

Front 54

Doha Development Agenda

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Further reduce tariffs and quotas for poor countries that don't afford to subsidized.

Front 55

Economic Growth

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Max output

Front 56

Income

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A flow of dollars per unit of time derived from the use of human or property resources.

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Wealth

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Anything that has value because it produces income. Stock.

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Stock

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An ownership share in a corporation.

Front 59

Assets

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Anything of monetary value owned by a firm or individual.

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Positive Economics

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True of false
Focuses on facts
Cause and effect

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Normative Economics

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(Should)
Opinion, judgement

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Lorenz Curve

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Distribution of income in an economy.

Front 63

Gini Coefficient of Inequality

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A numerical measure of the overall dispersion of income.

Front 64

Productive Efficiency

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The production of a good in the least costly way.

Front 65

Allocative Efficiency

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Output in which MB=MC
Peoples wants

Front 66

Basic Macroeconomics Goals

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Growth with population pace
Full employment
Price stability with no inflation nor deflation
Preserve environment
Optical balance

Front 67

What?
How?
For Whom?
Which System?

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Opportunity cost
Land and labor by entrepreneurs
Households
Socialism and Capitalism

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Households

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Economic entities that provide resources to the economy and use the income received to purchase goods and services that satisfy economic wants.

Front 69

Jan Tinbergan

Back 69

Dutch economist from 1900's
Believed in ideal balance between socialism and capitalism.

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Friedrich August Von Hayek

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Austrian economist from 1900's
Did not believe in ideal balance.

Front 71

Adam Smith

Back 71

Scottish economist from 1700's
The Wealth of Nations
"Invisible Hand"
Supports Comparative Advantage