Macro - Lesson 1 Key Terms

Front 1

economics

Back 1

the study of the choices, methods, and systems used by societies to allocate scarce resources

Front 2

fallacy of composition

Back 2

exists when we conclude that something that is appropriate for an individual must be also appropriate for society. "If it is good for the individual to save more it must be good for the overall economy."

Front 3

macroeconomics

Back 3

a study of the allocation of resources relative to the overall national economy or large sectors within it.

Front 4

marginal analysis

Back 4

comparing the extra costs to the extra benefits as an aid to decision making. "Is the extra benefit of a college degree greater than the extra cost?"

Front 5

microeconomics

Back 5

a study of the allocation of resources in smaller units, specifically the individual consumer and the individual business unit or firm

Front 6

normative economics

Back 6

the description of the economy where opinion is utilized and value judgments are made. "Because of government's effective use of fiscal policy, unemployment has fallen to only 5%."

Front 7

opportunity cost analysis

Back 7

anytime we receive a benefit from use of a resource, it comes at a cost because we could have used that resource for something different. All of our decisions come at a cost and this cost is compared to the benefit we receive in deciding if we should undertake the action.

Front 8

positive economics

Back 8

the description of an economy by stating facts or using specific data. No opinion is involved. "The unemployment rate is 5%."

Front 9

policy economics

Back 9

the application of the principles of economics to government policy actions. Government seeks to understand economic activities in order to influence economic activity.

Front 10

rational analysis

Back 10

the study of economics involves the use of a logical pattern of thinking as well as analytical tools of analysis.

Front 11

variable analysis

Back 11

economists consider the variable relationships in their analysis with an emphasis on considering the relationship of one variable at a time. This is called ceteris paribus (Latin translated as meaning one at a time). Each variable is evaluated relative to itself rather than in combination with many other variables.