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90 Cards in this Set
- Front
- Back
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ECONOMY |
SUM OF ALL THE DECISIONS/CHOICES MADE AND ACTIONS TAKEN BY INDIVIDUALS AND GROUPS (including households, businesses, and government) INVOLVING THE USE OF ANY KIND OF RESOURCE |
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ECONOMICS |
SOCIAL SCIENCE THAT STUDIES THE CHOICES INDIVIDUALS AND SOCIETIES MAKE REGARDING THE USE OF RESOURCES |
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DIFFERENCE BETWEEN MICROECONOMICS AND MACROECONOMICS |
MICRO: STUDIES THE DECISIONS OF INDIVIDUALS, HOUSEHOLDS, AND FIRMS WHILE FOCUSING ON THE INTERACTION OF BUYERS AND SELLERS IN SPECIFIC MARKETS
MACRO: STUDY OF THE ECONOMY AS A WHOLE; USES ECONOMIC AGGREGATES (national unemployment rate, rate of inflation, economy's growth rate) TO MEASURE ECONOMIC ACTIVITY & EVALUATE PERFORMANCE |
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POSITIVE ECONOMICS |
STATEMENTS ABOUT WHAT IS; CAN BE TESTED AGAINST FACTS |
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NORMATIVE ECONOMICS |
STATEMENTS OF WHAT SHOULD BE; REQUIRES VALUE JUDGEMENTS |
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SCARCITY |
EXISTS BECAUSE THERE ARE NOT ENOUGH RESOURCES AVAILABLE TO PRODUCE ALL THE GOODS AND SERVICES THAT PEOPLE WANT AND NEED |
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FOUR RESOURCE CATEGORIES |
C: CAPITAL E: ENTREPRENEURSHIP L: LAND L: LABOR |
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LAND RESOURCE: |
ALL GIFTS OF NATURE TIMBER, WATER, MINERALS, CLIMATE |
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LABOR RESOURCE: |
PHYSICAL AND MENTAL TALENTS OF PEOPLE PRODUCTION EFFORTS OF ALL KINDS OF WORKERS RETAIL, MANUFACTURING, AND SERVICES |
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CAPITAL RESOURCE: |
PHYSICAL PLANT AND EQUIPMENT USED IN PRODUCTION REFERS TO STRUCTURES THAT HAVE BEEN BUILT AND THE MACHINES, TOOLS, AND EQUIPMENT THAT HAVE BEEN PRODUCED IN THE PAST |
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ENTREPRENEURS: |
INNOVATORS WHO START OR OPERATE A BUSINESS IN THE EXPECTATION OF EARNING PROFIT TAKE RISKS |
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OPPORTUNITY COST |
THE VALUE OF THE NEXT BEST ALTERNATIVE THAT MUST BE GIVEN UP WHEN A CHOICE IS MADE |
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CETERIS PARIBUS ASSUMPTION |
USED TO ISOLATE THE RELATIONSHIP BETWEEN TWO VARIABLES BY HOLDING OTHER INFLUENCES ON THE RELATIONSHIP CONSTANT |
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FALLACY OF FALSE CAUSE POST HOC FALLACY ASSOCIATION-CAUSATION ISSUE |
WHEN IT IS ASSUMED THAT BECAUSE ONE EVENT FOLLOWS ANOTHER, THE FIRST EVENT MUST HAVE CAUSED THE SECOND EVENT |
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FALLACY OF DIVISION |
WHEN IT IS INCORRECTLY ASSUMED THAT WHAT IS TRUE FOR THE WHOLE IS ALSO TRUE FOR EACH PART OF THE WHOLE |
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FALLACY OF COMPOSTION |
WHEN IT IS INCORRECTLY ASSUMED THAT WHAT IS TRUE FOR THE PARTS IS ALSO TRUE FOR THE WHOLE |
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EXPORTED |
SOLD IN OTHER COUNTRIES |
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IMPORTED |
PURCHASED FROM OTHER COUNTRIES |
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TRADE SURPLUS OCCURS WHEN THE VALUE OF _________ EXCEEDS THE VALUE OF __________ |
EXPORTS;IMPORTS |
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TRADE DEFICIT OCCURS WHEN THE VALUE OF _________ EXCEEDS THE VALUE OF __________ |
IMPORTS;EXPORTS |
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BALANCE OF TRADE OCCURS WHEN __________ |
VALUE OF EXPORTS EQUALS THE VALUE OF IMPORTS |
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NATIONAL INCOME |
TOTAL PAYMENTS TO THE FACTORS OF PRODUCTION IN A GIVEN PERIOD |
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GROSS DOMESTIC PRODUCT (GDP) |
MARKET VALUE OF ALL FINAL GOOD AND SERVICES PRODUCED IN THE ECONOMY IN A GIVEN PERIOD |
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DIRECT/POSITIVE RELATIONSHIP EXISTS WHEN |
A CHANGE IN THE INDEPENDENT VARIABLE CAUSES THE DEPENDENT VARIABLE TO CHANGE IN THE SAME DIRECTION |
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INVERSE/NEGATIVE RELATIONSHIP EXISTS WHEN |
A CHANGE IN THE INDEPENDENT VARIABLE CAUSES THE DEPENDENT VARIABLE TO CHANGE IN THE OPPOSITE DIRECTION |
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PPF PRODUCTION POSSIBILITIES FRONTIER |
THE GRAPH ILLUSTRATING THE COMBINATIONS OF TWO TYPES OF OUTPUT THAT CAN BE PRODUCED BY A SOCIETY USING THE AVAILABLE RESOURCES AND TECHNOLOGY |
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INCREASING OPPORTUNITY COSTS |
WHEN RESOURCES ARE NOT WELL SUITED TO ALL TYPES OF PRODUCTION ( PPF BOWS OUTWARD) |
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ECONOMIC GROWTH |
OUTWARD SHIFT OF THE PRODUCTION POSSIBILITIES CURVE |
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MACROECONOMICS GOALS |
FULL EMPLOYMENT, PRICE STABILITY, AND ECONOMIC GROWTH |
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CAPITALISM |
RESOURCES ARE PRIVATELY OWNED AND DECISIONS ABOUT HOW THOSE RESOURCES ARE MADE BY INDIVIDUALS AND FIRMS |
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INCENTIVES |
MOTIVATED THROUGH SELF INTEREST TO MAKE EFFICIENT CHOICES |
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PLANNED/COMMAND |
GOVERNMENT OWNS OR CONTROLS MOST RESOURCES AND USES CENTRAL PLANNING TO DECIDE HOW TO ALLOCATE RESOURCES |
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MIXED SYSTEM |
ELEMENTS OF BOTH MARKET AND PLANNED ECONOMIES |
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FISCAL POLICY |
USE OF THE GOVERNMENT'S BUDGET FOR THE PURPOSE OF ALTERING ECONOMIC OUTCOMES |
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MONETARY POLICY |
FEDERAL RESERVE USES ITS ABILITY TO INFLUENCE THE MONEY SUPPLY AND CREDIT CONDITIONS IN ORDER TO ACHIEVE ITS PRIMARY OBJECTIVE OF PRICE LEVEL STABILITY |
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LAW OF DEMAND |
A GREATER QUANTITY WILL BE DEMANDED AT LOWER RELATIVE PRICES THAN AT HIGHER RELATIVE PRICES, CETERIS PARIBUS |
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WHAT KIND OF RELATIONSHIP IS BETWEEN PRICE AND QUANTITY DEMANDED |
INVERSE/NEGATIVE |
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LAW OF SUPPLY |
A GREATER QUANTITY WILL BE SUPPLIED AT HIGHER RELATIVE PRICES THAN AT LOWER RELATIVE PRICES |
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WHAT KIND OF RELATIONSHIP IS BETWEEN PRICE AND QUANTITY SUPPLIED |
DIRECT/POSITIVE |
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QUANTITY DEMANDED = QUANTITY SUPPLIED
THE MARKET IS AT ___________ |
EQUILIBRIUM |
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WHEN QUANTITY _________ EXCEEDS QUANTITY __________, THERE IS A MARKET SURPLUS |
SUPPLIED;DEMANDED |
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WHEN QUANTITY _________ EXCEEDS QUANTITY __________, THERE IS A MARKET SHORTAGE |
DEMANDED;SUPPLIED |
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CHANGE IN PRICE CAUSES A ________________________ THE DEMAND CURVE FROM POINT A TO POINT B |
MOVEMENT ALONG |
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RIGHTWARD SHIFT OF POINT A TO POINT B |
INCREASE IN DEMAND |
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LEFTWARD SHIFT OF POINT A TO POINT B |
DECREASE IN DEMAND |
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FOR ________ GOODS, INCREASES IN INCOME LEAD TO INCREASES IN DEMAND DECREASES IN INCOME LEAD TO DECREASES IN DEMAND |
NORMAL |
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FOR _______ GOODS, DEMAND DECREASES WHEN INCOME INCREASES AND DEMAND INCREASES WHEN INCOME DECREASES |
INFERIOR |
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SUBSTITUTES |
TWO THINGS THAT PERFORM SAME BASIC FUNCTION |
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COMPLEMENTS |
TWO THINGS USED TOGETHER (hot dogs and hot dog buns) |
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INCLUDES PEOPLE OVER THE AGE OF 16 WHO ARE WORKING OR ACTIVELY SEEKING EMPLOYMENT, AND EXCLUDES MEMBERS OF THE MILITARY AND THOSE WHO HAVE BEEN INSTITUTIONALIZED |
CIVILIAN NON-INSTITUTIONALIZED LABOR FORCE |
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LFPR |
LABOR FORCE PARTICIPATION RATE |
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LABOR FORCE = ___________ + ___________ |
EMPLOYED;UNEMPLOYED |
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INABILITY OF LABOR FORCE PARTICIPANTS TO FIND A JOB |
UNEMPLOYMENT |
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PERCENTAGE OF THE LABOR FORCE THAT IS UNEMPLOYED |
UNEMPLOYMENT RATE |
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WHAT IS THE FORMULA FOR UNEMPLOYMENT RATE |
UNEMPLOYMENT RATE = (NUMBER OF UNEMPLOYED PEOPLE / LABOR FORCE) X 100 |
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UNDEREMPLOYED |
WORKERS CONTINUING TO SEARCH FOR EMPLOYMENT AND THE RATE OF UNEMPLOYMENT UNDERSTATES HOW MANY WORKERS ARE ENGAGED IN JOB SEARCH |
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DISCOURAGED WORKERS |
PEOPLE WHO ARE WILLING AND ABLE TO WORK BUT HAVE GIVEN UP ACTIVELY SEARCHING FOR EMPLOYMENT DUE TO LACK OF SUCCESS |
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PHANTOM UNEMPLOYED |
THOSE WHO CLAIM TO BE UNEMPLOYED (ACTIVELY SEEKING WORK) WHEN THEY ARE NOT |
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FRICTIONAL UNEMPLOYMENT |
WHEN THERE ARE JOBS AVAILABLE AND QUALIFIED WORKERS WHO ARE WILLING AND ABLE TO ACCEPT THOSE JOBS BUT THE PROCESS OF LOOKING AT JOB VACANCIES, APPLYING, INTERVIEWING, AND BEING HIRED TAKES TIME |
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STRUCTURALLY UNEMPLOYED |
WHEN CHANGES IN THE ECONOMY ELIMINATES JOBS, RELOCATES JOBS, AND CREATES NEW JOBS REQUIRING SKILLS THE UNEMPLOYED DO NOT POSSESS |
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RECESSION |
DOWNTURN IN THE OVERALL ECONOMY AND NOT IN JUST ONE SECTOR |
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INFLATION |
PERSISTENT INCREASE IN THE AVERAGE LEVEL OF PRICES OF GOODS AND SERVICES |
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CPI CONSUMER PRICE INDEX |
MEASURE OF CHANGES IN THE AVERAGE PRICE OF GOODS AND SERVICES PURCHASED BY CONSUMERS |
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FORMULA FOR PRICE INDEX |
PRICE INDEX = (EXPENDITURE ON THE MARKET BASKET IN THE CURRENT PERIOD / EXPENDITURE ON THE MARKET BASKET IN THE BASE PERIOD) X 100 |
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FORMULA FOR ANNUAL INFLATION RATE |
ANNUAL INFLATION RATE = [(CPI year 2 - CPI year 1) / CPI year 1] X 100 |
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FORMULA FOR REAL VALUE |
REAL VALUE = NOMINAL VALUE / (PI2 / PI1) |
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FORMULA FOR REAL INCOME |
REAL INCOME t = (NOMINAL INCOME t / CPI t) X 100 |
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FORMULA FOR GDP |
GDP = CONSUMPTION + INVESTMENT + GOVERNMENT + (EXPORTS - IMPORTS) |
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WHAT IS THE LARGEST COMPONENT OF GDP |
CONSUMPTION SPENDING |
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FORMULA FOR NET PRIVATE DOMESTIC INVESTMENT |
I = GROSS PRIVATE DOMESTIC INVESTMENT - DEPRECIATION |
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GNP GROSS NATIONAL PRODUCT |
TOTAL MARKET VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED BY DOMESTICALLY OWNED RESOURCES |
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FORMULA FOR GNP |
GNP = GDP + NET FOREIGN FACTOR INCOME |
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NET FOREIGN FACTOR INCOME |
INCOME EARNED BY DOMESTICALLY-OWNED RESOURCES ABROAD MINUS INCOME EARNED BY FOREIGN-OWNED RESOURCES |
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NDP NET DOMESTIC PRODUCT |
WITH GNP, IS NNP NET NATIONAL PRODUCT REFLECTS TOTAL OUTPUT AFTER SUBTRACTING THE VALUE OF CAPITAL THAT WAS DEPRECIATED OR LOST DURING THE PRODUCTION PROCESS |
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FORMULA FOR NDP
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GDP - DEPRECIATION |
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FORMULA FOR NNP |
GNP - DEPRECIATION |
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NATIONAL INCOME |
TOTAL EARNINGS OF LABOR AND PROPERTY FROM THE PRODUCTION OF GOODS AND SERVICES |
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FORMULA FOR NATIONAL INCOME |
NI = WAGES + RENT + INTEREST + CORPORATE PROFITS + PROPRIETORS' INCOME + FARM INCOME NI = NNP - INDIRECT BUSINESS TAXES |
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PERSONAL INCOME |
THE TOTAL INCOME RECEIVED BY PERSONS FROM ALL SOURCES BEFORE PERSONAL TAXES HAVE BEEN DEDUCTED |
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FORMULA FOR PERSONAL INCOME |
PI = NI - CORPORATE TAXES - RETAINED EARNINGS - SOCIAL SECURITY TAXES + TRANSFER PAYMENTS + NET INTEREST |
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DISPOSABLE INCOME |
THE INCOME REMAINING TO PERSONS AFTER PAYMENT OF PERSONAL TAXES |
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FORMULA FOR DISPOSABLE INCOME |
DI = PI - PERSONAL TAXES = CONSUMPTION SPENDING + PERSONAL SAVING = C + S |
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NOMINAL GDP |
MONEY VALUE OF OUTPUT MEASURED IN CURRENT PRICES |
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REAL GDP |
CONSTANT DOLLAR GDP VALUE OF CURRENT OUTPUT USING THE PRICES OF ANOTHER TIME PERIOD |
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GDP DEFLATOR |
USED TO MEASURE HOW THE OVERALL PRICE LEVEL IS CHANGING OVER TIME |
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FORMULA FOR REAL GDP |
(NOMINAL GDP / GDP DEFLATOR) X 100 |
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FORMULA FOR ANNUAL GROWTH RATE |
REAL [(GDP year 2 - REAL GDP year 1) / REAL GDP year 1] X 100 |
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PER CAPITA REAL GDP |
REAL GDP / POPULATION |
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CAPITAL INFLOW |
FLOW OF FOREIGN MONEY INTO THE UNITED STATES |
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CAPITAL OUTFLOW |
CAPITAL MOVING FROM THE UNITED STATES TO OTHER COUNTRIES |
