Economics Test 1

Front 1

Economics

Back 1

The social science that deals with how individuals, households, firms, and government make decisions under conditions of scarcity.

Front 2

Scarcity

Back 2

Unlimited wants, limited resources

Front 3

Micro

Back 3

Small (individuals, households, firms)

Front 4

Macro

Back 4

Big (the economy as a whole, unemployment, inflation, GDP)

Front 5

Positive

Back 5

Stated as a face, can be tested

Front 6

Normative

Back 6

Opinion, should be, could be

Front 7

Factors of production

Back 7

land, labor, capital, entrepreneurship

Front 8

Earnings

Back 8

land=rent, labor=wages, capital=interest, entrepreneurship=profit

Front 9

Circular flow diagram

Back 9

Front 10

Opportunity cost

Back 10

next best alternative, marginal cost,

Front 11

PPF

Back 11

productions possibility frontier

Front 12

Efficient PPF

Back 12

on line

Front 13

Inefficient PPF

Back 13

inside line

Front 14

Unattainable PPF

Back 14

away from line

Front 15

PPF shifts

Back 15

right, left, up, down

Front 16

economic growth

Back 16

entire line shifts out

Front 17

comparative advantage

Back 17

lower opportunity cost

Front 18

absolute advantage

Back 18

do it better

Front 19

law of demand

Back 19

there is a negative or inverse relationship between price and quantity demand

Front 20

change in quantity demand

Back 20

change in price of good, movement along curve

Front 21

change in demand

Back 21

shifts curve, tastes and preferences, relatied goods, income

Front 22

shift factors

Back 22

price, production, technology, suppliers, taxes, future prices

Front 23

market demand

Back 23

me + you = market

Front 24

complements

Back 24

P + D - OR P- D +

Front 25

substitutes

Back 25

P + D + OR P - D -

Front 26

normal good

Back 26

I + D + OR I - D -

Front 27

inferior good

Back 27

I + D - OR I - D +

Front 28

law of supply

Back 28

there is a positive relationship between price and quantity supplied

Front 29

change in quantity supplied

Back 29

price of good movement along curve

Front 30

change in supply

Back 30

price, production, technology, suppliers, taxes, future prices

Front 31

price ceiling

Back 31

bottom, max price, shortage excess demand

Front 32

price floor

Back 32

top, min price, surplus excess supply

Front 33

GDP

Back 33

gross domestic product, market value of all final goods and services produced in a country in a given time period, C+I+G+(x-m)

Front 34

real GDP

Back 34

base year prices adjusted for inflation, price in base year x quanitity

Front 35

nominal GDP

Back 35

todays prices, (PxQ)+(PxQ)

Front 36

labor force

Back 36

employed and unemployed

Front 37

full employment

Back 37

all who can work are employed

Front 38

natural rate of employment

Back 38

minimum unemployment rate resulting from real, or voluntary, economic forces

Front 39

unemployment

Back 39

frictional (looking for job), structural (job no longer exists), cyclical (laid off)

Front 40

unemployment rate

Back 40

(#unemployed/labor force)x100

Front 41

labor force participation rate

Back 41

(labor force/WAP)x100

Front 42

employment to population ratio

Back 42

(#employed/WAP)x100

Front 43

CPI

Back 43

used to measure inflation, (current/base year)x100

Front 44

inflation

Back 44

increase in general price level, (CPI this year-CPI last year)/(CPI last year)x100