Macroeconomics Mcconnell 18 Chapter 1

Front 1

Economics

Back 1

Studies how individuals, institutions, and society make the optimal or best choices under conditions of scarcity, for which economic wants are unlimited and the means or resources to satisfy those wants are limited

Front 2

Scarcity

Back 2

Society cannot produce everything that everyone wants or will like to have. As long as we have limited resources we will have scarcity.

Front 3

Opportunity cost

Back 3

It recognizes that scarcity requires choice. Giving up the next best alternative to the choice that was made. It views people as purposeful decision makers who make choices based on their self interests or utility, from consuming a good or service.

Front 4

Marginal analysis

Back 4

to assess how the marginal costs of a decision compare with the marginal benefits.

Front 5

Scientific method

Back 5

Economics relies on this for analysis

Front 6

Hypothesis

Back 6

is a proposition that is tested and used to develop an economic theory

Front 7

Economic Principle or law

Back 7

A highly tested and reliable economic theory.

Front 8

Economic model

Back 8

is created when several economic laws or principles are use to explain or describe reality.

Front 9

other- things- equal assumption ( ceteris paribus)

Back 9

the assumption that factors other than those being considered are held constant; ceteris paribus assumption

Front 10

microeconomics

Back 10

The part of economics concerned with decision making by individuals units such as a household, a firm, or an industry and with individual markets, specific goods and services, and product and resource prices

Front 11

Macroeconomics

Back 11

The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy.

Front 12

aggregate

Back 12

A collection of specific economic units treated as if they were one. For example, all prices of individual goods and services are combined into a price level, or all units of output are aggregated into gross domestic product.

Front 13

Positive economics

Back 13

The formulation of courses of action to bring about desired economic outcomes or to prevent undesired occurrences.

Front 14

normative economics

Back 14

The part of economics involving value judgment about what the economy should be like: focused on which economic goals and policies should be implemented ; policy economics

Front 15

economizing problem

Back 15

The choices necessitated because society economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce)

Front 16

Economics

Back 16

Studies how individuals, institutions, and society make the optimal or best choices under conditions of scarcity, for which economic wants are unlimited and the means or resources to satisfy those wants are limited

Front 17

Scarcity

Back 17

Society cannot produce everything that everyone wants or will like to have. As long as we have limited resources we will have scarcity.

Front 18

Opportunity cost

Back 18

It recognizes that scarcity requires choice. Giving up the next best alternative to the choice that was made. It views people as purposeful decision makers who make choices based on their self interests or utility, from consuming a good or service.

Front 19

Marginal analysis

Back 19

to assess how the marginal costs of a decision compare with the marginal benefits.

Front 20

Scientific method

Back 20

Economics relies on this for analysis

Front 21

Hypothesis

Back 21

is a proposition that is tested and used to develop an economic theory

Front 22

Economic Principle or law

Back 22

A highly tested and reliable economic theory.

Front 23

Economic model

Back 23

is created when several economic laws or principles are use to explain or describe reality.

Front 24

other- things- equal assumption ( ceteris paribus)

Back 24

the assumption that factors other than those being considered are held constant; ceteris paribus assumption

Front 25

microeconomics

Back 25

The part of economics concerned with decision making by individuals units such as a household, a firm, or an industry and with individual markets, specific goods and services, and product and resource prices

Front 26

Macroeconomics

Back 26

The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy.

Front 27

aggregate

Back 27

A collection of specific economic units treated as if they were one. For example, all prices of individual goods and services are combined into a price level, or all units of output are aggregated into gross domestic product.

Front 28

Positive economics

Back 28

The formulation of courses of action to bring about desired economic outcomes or to prevent undesired occurrences.

Front 29

normative economics

Back 29

The part of economics involving value judgment about what the economy should be like: focused on which economic goals and policies should be implemented ; policy economics

Front 30

economizing problem

Back 30

The choices necessitated because society economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce)

Front 31

budget line

Back 31

A line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products' prices

Front 32

economic resources

Back 32

The land, labor, capital, and entrepreneurial ability that are used in the production of goods and service; productive agents' factors of production.

Front 33

land

Back 33

Natural resource (free gift of nature) used to produce goods an services.

Front 34

labor

Back 34

people's physical an mental talents and efforts that are used to help produce goods and services.

Front 35

capital

Back 35

Human- made resources (building machinery, and equipment) used to produce goods and services: good that do not directly satisfy human wants; also called capital goods

Front 36

investment

Back 36

In economics , spending for the production and accumulation of capital and additions to inventories( for contrast, see financial investment)

Front 37

entrepreneurial ability

Back 37

The human resource that combines the other resources to produce a product, makes non-routine decisions, innovates, and bears risks.

Front 38

factors of production

Back 38

Economic resources; land capital, labor,and entrepreneurial ability

Front 39

consumer goods

Back 39

products and services that satisfy human wants directly

Front 40

capital goods

Back 40

see capital

Front 41

production possibilities curve

Back 41

a curve showing the different combinations of two goods or services that can be produce in a full- employment, full production economy where the available supplies of resources and technology are fixed.

Front 42

law of increasing opportunity cost

Back 42

the principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease.

Front 43

economic growth

Back 43

(1) an outward shift in the production possibilities curve that results form an increase in resource supplies or quality or an improvement in technology(2) an increase of real output ( gross domestic product ) or real output per capita

Front 44

production possibilities curve

Back 44

a curve showing the different combinations of two goods or services that can be produce in a full- employment, full production economy where the available supplies of resources and technology are fixed.

Front 45

law of increasing opportunity cost

Back 45

the principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease.

Front 46

economic growth

Back 46

(1) an outward shift in the production possibilities curve that results form an increase in resource supplies or quality or an improvement in technology(2) an increase of real output ( gross domestic product ) or real output per capita