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40 Cards in this Set
- Front
- Back
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macroeconomics
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the study of the economy as a whole; such as inflation, unemployment and economic growth
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microeconomics
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study of how households and firms make choices, how they interact in markets, and how the gov't attempts to influence their choices.
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innovation
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the process of turning an invention into a marketable product
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Consumer surplus
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the difference between the highest price a consumer is willing to pay and the price the consumer actually pays.
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Deadweight loss
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the reduction in economic surplus resulting from a market not being in competitive equilibrium
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Marginal cost
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the additional cost to a firm of producing one more unit of a good or service.
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Adam Smith's "Indivisible Hands"
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a model of the market economy or the free enterprise system. it is also the model for the pure capitalism
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Karl Marx
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the opposite of adam's in economic philosophy, he was the father of communist economic philosophy. he was the severest critic of the market economy.
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Monetary policy
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The actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomics policy objectives
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Asset
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anything of value owned by a person or firm.
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Bretton Woods system
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an exchange rate system that lasted from 1944 to 1971, under which countries pledged to buy and sell their currencies at a fixed rate againtst the dollar.
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International Monetary Fund
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An international organization that provides foreign currency loans to central banks and oversees the operation of the international monetary system
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Natural rate of unemployment
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The unemployment rate that exists when the economy is at potential GDP.
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Bond
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a financial security that represents a promise to repay a fixed amount of funds.
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Liability
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anything owned by a person or a firm.
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Transfer payments
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payments by the government to individuals for which the government does not receive a new good or service in return.
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Labor force
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The sum of employed and unemployed workers in the economy.
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Recession
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The period of a business cycle during which total production and total employment are decreasing.
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Fiscal policy
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Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives, such as high employment, price stability, and high rates of economic growth.
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Industrial Revolution
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The application of mechanical power to the production of goods, beginning in England around 1750.
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Equity
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The fair distribution of economic benefits
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Income statement
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A financial statement that sums up a firm's revenues, costs, and profit over a period of time.
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Balance sheet
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A financial statement that sums up a firm's financial position on a particular day, usually the end of a quarter or year.
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The functions of money
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Medium of exchange-5$ for milk and bread
Unit of account-A cow is worth 2 plows Store of value-Farmers rather hold many rather than inventories of perishable goods Standard of deferred payment-Credit card |
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Elasticity
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a measure of how much a change in one economic variable responds to changes in another economic variable
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sole proprietorship
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one business owner
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partnershp
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two or more business owners that is not a corp.
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corporation
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a legal form of business that provides limited liability to its owners
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inflation
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an increase in the average price level
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Keynesian economic philosophy
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published the "General Theory" of employment, interest, and money. The great depression was so severe that it stimulated new thinking about how the economy worked or didn't work
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The Gold Standard
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an arrangement whereby the currencies of most countries are converted into gold at a fixed rate.
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GDP equation
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Y=C+I+G+NX
Y(GDP), C(consumption), I(investment), G(gov't purchases), NX(net exports) |
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consumption
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spending by households on goods and services, not including spending on new houses
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investment
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spending by firms on new factories, office buildings, machinery, and additions to inventories, and spending by households on new houses
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GDP
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the market value of all final goods and services produced in a country during a period of time, typically one year
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gov't purchases
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spending by federal, state, and local govts on goods and services
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net exports
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exports minus imports
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M1
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narrowest def of money supply:currency, checking accounts, travelers check
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M2
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M1 plus: savings account balances, small-denominatioin time deposits, money market deposit accounts, miscellaneous near moneys
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M3
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M1+M2 and large denomination time deposits
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