Term
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Definition
| value of the next best alternative |
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Term
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Definition
| ignoring many details to focus on essential parts of a problem |
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Term
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Definition
| deliberate simplification of relationships to explain how those relationships work |
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Term
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Definition
| two variables change simultaneously, whether or not a causal relationship exists |
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Term
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Definition
| simplified version of some aspect of the economy |
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Term
| factors of production or inputs |
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Definition
| labour, machinery, bulidings, and natural resources used in production |
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Term
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Definition
| goods and services desired by consumers |
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Term
| gross domestic product (GDP) |
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Definition
| money vaule of final goods and services produced in a year |
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Term
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Definition
| international trade is a large proportion of GDP |
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Term
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Definition
| economy in which exports and imports are small relative to GDP |
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Term
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Definition
| a period when real GDP declines |
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Term
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Definition
| money that individuals receive from the government as grants |
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Term
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Definition
| the proportion of income paid as taxes increase as income increases |
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Term
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Definition
| economy with public influence over the workings of free markets |
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Term
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Definition
| instruments used to create the goods and services people desire |
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Term
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Definition
| forgone of value of the next best alternative |
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Term
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Definition
| a decision that best serves the decision maker's objectives |
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Term
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Definition
| goods and services that firms produce |
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Term
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Definition
| resources used to produce goods and services |
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Term
| prodection possiblities frontier |
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Definition
| graph of combinations of goods that can be produced with available inputs and existing technology |
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Term
| principle of increasing costs |
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Definition
| tendency for the opportunity cost of an additional unit of output to rise as production increases |
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Term
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Definition
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Term
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Definition
| decision on how to divide scarce resources among different users |
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Term
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Definition
| breaking tasks into smaller jobs |
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Term
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Definition
| ability to produce goods less inefficently than other producers |
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Term
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Definition
| system in which decisions on resource allocation come from independent decisions of consumers and producers |
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Term
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Definition
| individual actions to pursue self-interest in a market system promote societal well-being |
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Term
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Definition
| number of units consumers want to buy at a given price |
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Term
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Definition
| table depicting how quantity demanded changes as price changes |
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Term
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Definition
| graph depicting how quantity demanded changes as price changes |
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Term
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Definition
| change in variable other than price that effects quantity demanded |
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Term
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Definition
| number of units consumers want to sell at a given price |
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Term
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Definition
| table depicting how quantity supplied changes as price changes |
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Term
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Definition
| graph depicting how quantity supplied changes as price changes |
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Term
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Definition
| graph depicting the changes in both quantity supplied and quantity supplied as price changes |
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Term
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Definition
| excess of quantity demanded over quantity supplied |
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Term
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Definition
| excess of quantity supplied over quantity demanded |
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Term
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Definition
| situation in which there are no inherent forces producing change |
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Term
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Definition
| observation that in a free market, price tends to a level where quantity supplied equals quantity demanded |
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Term
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Definition
| legal maximum price that can be charged |
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Term
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Definition
| legal minimum price that can be charged |
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Term
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Definition
| study of individual decision-making units |
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Term
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Definition
| study of behavior of entire economy |
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Term
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Definition
| combinding individual markets into a single, overall market |
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Term
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Definition
| graph of quantity of domestic product demanded at each possible price level |
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Term
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Definition
| graph of quantity of domestic product produced at each possible price level |
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Term
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Definition
| sustained increase in general price level |
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Term
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Definition
| sustained decrease in general price level |
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Term
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Definition
| period of decline in an economy's total output |
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Term
| gross domestic product (GDP) |
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Definition
| sum of money values of all final goods and services produced in the domestic economy and sold on organized markets within the year |
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Term
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Definition
| gross domestic product calculated at current price levels |
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Term
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Definition
| gross domestic product calculated using prices from some agreed-upon base year |
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Term
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Definition
| products puchased by their ultimate users |
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Term
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Definition
| products purchased for resale or for their use in producing oter goods |
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Term
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Definition
| output divided by population |
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Term
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Definition
| inflation occurring while the economy is growing slowly or in a recession |
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Term
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Definition
| the governement's plan for spending and taxes |
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Term
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Definition
| actions by the federal reserve that affect interest rates and/or the money supply |
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Term
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Definition
| governement programs designed to prevent or shorten recessions and to counteract inflation |
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Term
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Definition
| labor, machinery, bulidings, and other resources used to produce output |
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