Macroeconomics Mcconnell Brue 17 Chapter 1

Front 1

Economics

Back 1

The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.

Front 2

Economic Perspective

Back 2

A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions.

Front 3

Opportunity Cost

Back 3

The amount of other products that must be forgone or sacrificed to produce a unit of a product.

Front 4

Utility

Back 4

The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consuption of a good or service (or from the consuption of a collection of goods and services).

Front 5

Marginal Analysis

Back 5

The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making.

Front 6

Scientific Method

Back 6

The procedure for the systematic pursuit of knowledge involving the observation of facts and teh formulation and testing of hypothesis to obtain theories, principles, and laws.

Front 7

Economic Principle

Back 7

A widely accepted generalization about the economic behavior of individuals or institutions.

Front 8

Other-Things-Equal Assumption

Back 8

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

Front 9

Macroeconomics

Back 9

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 10

Aggregate

Back 10

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 and the real domestic output.

Front 11

Ceteris Paribus Assumption

Back 11

The Other-Things-Equal Assumption. The assumption that factors other than those being considered are held constant.

Front 12

Microeconomics

Back 12

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

Front 13

Positive Economics

Back 13

The analysis of facts or data to establish scientific generalizations about economic behavior.

Front 14

Normative Economics

Back 14

The part of economics involving value judgements 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's economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce).

Front 16

Budget Line

Back 16

Also called a Budget Constraint. It is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income.

Front 17

Economic Resources

Back 17

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

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Land

Back 18

Natural resources ("free gifts of nature") used to produce goods and services.

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Labor

Back 19

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

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Capital

Back 20

Human-made resources (buildings, machinery, and equipment) useed to produce goods and services; goods that do not directly satisfy human wants; also called capital goods.

Front 21

Entrepreneurial Ability

Back 21

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

Front 22

Factors of Production

Back 22

Economic resources; land, capital, labor, and entrepreneurial ability.

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Consumer Goods

Back 23

Products and services that satisfy human wants directly.

Front 24

Production Possibilities Curve

Back 24

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

Front 25

Law of Increasing Opportunity Costs

Back 25

The principle that as the production of a good increases, the opportunity cost of producing an additional unit rises.

Front 26

Economic Growth

Back 26

(1) An outward shift in the production possiblities curve that results from 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 27

Investment

Back 27

Spending for the production and accumulation of capital and additions to inventories.

Front 28

Capital Goods

Back 28

Same as Capital. Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants.