Macroeconomics Lecture 1

Front 1

Scarcity of Resources

Back 1

Limited quantities of land, Capital, labor, and entrepreneurial ability that is never sufficient to satisfy people's virtually unlimited economic desires.

Front 2

Economic models

Back 2

Models that try to create an abstract representation of economic realities.

Front 3

Smith's invisible hand Theory

Back 3

A theory first postulated by Adam Smith and his famous 1776 text titled and inquiry into the nature and causes of The Wealth of Nations.

Front 4

Gross Domestic Product (GDP )

Back 4

The sum of all the final goods and services produced by the society during a given period within a country's borders.

Front 5

Comparative Advantage

Back 5

In macroeconomic terms, when a society has the ability to employ its resources to produce a product or service more efficiently or cheaper than anyone else.

Front 6

Absolute Advantage

Back 6

When a society is able to produce a product or service using fewer resources than other producers.

Front 7

Economic System or Philosophy

Back 7

A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and the command system are the two general types.

Front 8

Feudalism

Back 8

A unilateral system of public control by the Kings and Nobles, or what they came to be known as "the aristocracy."

Front 9

Capitalism

Back 9

An economic system in which property resources are privately owned and markets and prices are used to direct and coordinate economic activity. The operating principle is that private property ownership could exit, and individuals and companies are allowed to compete for their own economic gain.

Front 10

Socialism

Back 10

An economic and political system that is based on the concept that the means of production, as well as the people, should be controlled by the government.

Front 11

Communism

Back 11

A method of organizing an economy in which property resources are publicly owned and government use a central economic planning to direct and coordinate economic activities. The brainchild of Karl Marx and Friedrich Engels.

Front 12

Communist Manifesto

Back 12

A document that laid all of society's and Mankind's current maladies (mainly property and war) at the doorstep of capitalism. Their economic premise was that "private property" and capitalism, far from bring out the best in the society, actually brought out the worst.

Front 13

Dialectical Materialism

Back 13

A term coined by Karl Marx and Friedrich Engels to explain what happened since the end of feudalism. Dialectical refers to a cycle, and materialism refers to controlling scarce resources of a society.

Front 14

Bourgeoisie

Back 14

A classification used in analyzing human societies describe a social class of people. A group of people who controlled the means of production or had power over the majority.

Front 15

Proletariat

Back 15

Those who were forced to respond to the dictates of the "bourgeoisie" because they didn't control the means of production.

Front 16

Imperialism

Back 16

A process identified by Karl Marx and Friedrich Engels of continually taking the scarce resources of another country by economic or military means.

Front 17

Idealists

Back 17

Those who believe that people are basically good, and it is just the system that needs to be changed.

Front 18

Mixed Economics

Back 18

A hybrid economic system.

Front 19

"Scarce Resources"

Back 19

Implies there's never enough of the resources to satisfy everyone's needs, and some type of rationing approach must be adopted.

Front 20

Law of Comparative Advantage

Back 20

This principle states that a society is better off focusing its scarce resources and means of production producing goods and services that have the lowest opportunity cost for them.

Front 21

Absolute Advantage

Back 21

When a country is able to produce a product or service using less of its scarce resources than other producers require.

Front 22

Continuing Economic Profit

Back 22

Profit formula: total revenues>total cost used in an industry, which results in expanded production and the movement of resources toward that industry.