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20 Cards in this Set
- Front
- Back
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Efficiency
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a criterion for judging the solution to an economic problem that refers to making the choices that best meet the objectives; if the economic problem has a single objective, then it means coming as close to the objective as possible; if the economic problem has more than 1 objective, then it means the Law of Substitution holds
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Law of Substitution
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a test of efficiency with more than 1 objective that says that moving closer to one objective is possible only be moving farther away from at least 1 other objective
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End-Results Equity
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a criterion for judging the solution to an economic problem that asks whether economic outcomes are fair
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Consumer Sovereignty
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the principles that individuals are best able to judge their own self-interests
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Horizontal Equity
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a principle of end-results equity that requires that equals receive equal treatment
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Process Equity
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a criterion for judging economic activity that asks whether the rules under which the economy operates are fair
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Equality of Opportunity
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a principle of process equity that requires that individuals have equal access to whatever economic opportunities they are willing & able to pursue so that they can develop their economic potential to the fullest
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Controlled Experiment
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the scientific method of analysis for determining cause-and-effect relationships that studies the effects of changing one element in an environment at a time while holding constant all the other elements in the environment
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Model
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a simplified description of some real world situation that isolates one particular aspect of the situation and studies the effects on that one aspect as different elements are changed one at a time
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Margin
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refers to the effects of a small change in an economic variable
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Normative Economic Analysis
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the study of what ought to be; attempts to determine appropriate norms or criteria for judging the results of economic behavior & activity
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Positive Economic Analysis
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the study of what is; attempts to determine what actually exists in the real world & to describe the consequences of economic decisions
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Microeconomics
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the study of the economy "in the small"; analyzes economic problems of individual economic agents & the exchanges between them
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Macroeconomics
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the study of the economy "in the large"; analyzes overall performance of the economy
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Long-Run Economic Growth
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a continuing process in which the economy is able to produce ever-increasing amounts of goods & services year after year
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Full Employment
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condition when all people who want to work have a job
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Unemployment
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condition when people are actively looking for work, but are unable to find a suitable job
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Price Stability
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prices in general are neither rising nor falling
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Price Inflation
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a persistent increase in the prices of most goods or services
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Stable Dollar
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value of the dollar remains constant relative to the currencies of other nations
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