Term
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Definition
| the goods available are too few to satisfy individuals desires |
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Term
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Definition
| the additional cost to you over and above the costs you have already incurred |
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Term
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Definition
| costs that have already been incurred and cannot be recovered |
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Term
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Definition
| the additional benefit above what you've already derived |
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Term
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Definition
| if the marginal benefits of doing something exceed the marginal costs, do it. if the marginal costs of doing something exceed the marginal benefits, dont do it |
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Term
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Definition
| there aint no such thing as a free lunch |
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Term
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Definition
| the benefit forgone by undertaking an activity |
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Term
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Definition
| the necessary reactions of scarcity |
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Term
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Definition
| an economic force that is given relatively free rein by society to work through the market |
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Term
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Definition
| the price mechanism, the rise and fall of prices that guides our actions in a market |
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Term
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Definition
| a framework that places the generalized insights of the theory in a more specific contextual setting |
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Term
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Definition
| a commonly held economic insight stated as law or general assumption |
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Term
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Definition
| achieving a goal as cheaply as possible |
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Term
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Definition
| a market economy, through the price mechanism, will tend to allocate resources efficiently |
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Term
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Definition
| the study of individual choice, and how that choice is influenced by economic forces |
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Term
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Definition
| the study of the economy as a whole |
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Term
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Definition
| actions (or inaction) taken by government to influence economic actions |
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Term
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Definition
| the study of what is, and how the economy works |
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Term
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Definition
| the study of what the goals of the economy should be |
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Term
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Definition
| the application of the knowlege learned in positive economics to the achievement of the goals one has determined in normative economics |
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Term
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Definition
quantity demanded rises as price falls, other things constant
quantity demanded falls as price rises, other things constant |
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Term
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Definition
| a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant |
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Term
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Definition
| a specific amount that will be demanded per unit of time at a specific price, other things constant |
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Term
| movement along a demand curve |
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Definition
| the graphical representation of the effect of a change in price on the quantity demanded |
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Term
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Definition
| the effect of anything other than price on demand |
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Term
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Definition
| society's income, the prices of other goods, tastes, expectations, taxes and subsidies to consumers |
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Term
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Definition
| the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society |
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Term
| three central problems facing any economy |
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Definition
1. what, and how much, to produce
2. how to produce it
3. for whom to produce it |
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Term
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Definition
| the horizontal sum of all indidvidual demand curves |
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Term
| two phenomena the law of demand is based on |
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Definition
1. at lower prices, existing demanders buy more
2. at lower prices, new demanders enter the market |
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Term
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Definition
quantity supplied rises as price rises, other things constant
quantity supplied falls as price falls, other things constant |
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Term
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Definition
| the graphical representation of the relationsip between price and quantity supplied |
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Term
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Definition
| a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant |
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Term
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Definition
| a specific amount that will be supplied at a specific price |
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Term
| movement along a supply curve |
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Definition
| the graphic representation of the effect of a change in price on the quantity supplied |
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Term
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Definition
| the graphic representation of the effect of a change in a factor other than price on supply |
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Term
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Definition
| price of inputs, technology, expectations, taxes and subsudies |
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Term
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Definition
| the horizontal sum of all individual supply curves |
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Term
| two phenomena the law of supply is based on |
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Definition
1. at higher prices, existing suppliers supply more
2. at higher prices, new suppliers enter the market |
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Term
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Definition
| the price toward which the invisible hand drives the market |
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Term
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Definition
| the amount bought and sold at the equilibrium price |
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Term
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Definition
| a concept in which opposing dynamic forces cancel each other out |
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Term
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Definition
| quantity supplied is greater than quantity demanded |
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Term
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Definition
| quantity demanded is greater than quantity supplied |
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Term
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Definition
| the false assumption that what is true for a part will also be true for the whole |
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Term
| real gross domestic product (real GDP) |
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Definition
| them market value of final goods and services produced in an economy, stated in the prices of a given year |
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Term
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Definition
| the upward or downward movement of economic activity, or real GDP, that occurs around the growth trend |
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Term
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Definition
| genearlly favor activist government policies |
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Term
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Definition
| generally favor laissez-faire or nonactivist policies |
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Term
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Definition
| a decline in real output that persists for more than two consecutive quarters of a year |
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Term
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Definition
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Term
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Definition
| an upturn that lasts at least two consecutive quarters of a year |
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Term
| four phases of the business cycle |
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Definition
1. peak
2. downturn
3. trough
4. upturn |
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Term
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Definition
| indicators that tell us what's likely to happen 12 to 15 months from now |
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Term
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Definition
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Term
| short-run business cycle focuses on ________ |
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Definition
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Term
| long-run growth framework focuses on _______ |
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Definition
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Term
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Definition
| the percentage of people in the economy who aer willing and able to work but who are not working |
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Term
| list five leading indicators |
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Definition
| money supply, stock prices, interest rate speed, number of new building permits issured for private housing units, index of consumer expectations |
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Term
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Definition
| unemployment resulting from fluctuations in economic activity |
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Term
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Definition
| unemployment caused by the institutional structure of an economy or by economic restructuring making some skills obselete |
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Term
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Definition
| unemployment caused by new entrants into the job market and people quitting a job just long enough to look for and find another one |
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Term
| target rate of unemployment |
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Definition
| the lowest sustainable rate of unemployment that policymkaers beleive is achievable given existing demographics and the economy's institutional structure (somewhere around 5%) |
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Term
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Definition
| those people in an economy who are willing and able to work |
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Term
| formula for finding the unemployment rate |
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Definition
| divide number of unemployed individuals by the number of people in the work force |
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Term
| labor force participation rate |
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Definition
| measures the labor force as a percentage of the total population at least 16 years old |
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Term
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Definition
| the number of people who are working as a percentage of the labor force |
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Term
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Definition
| the output that would materialize at the target rate of unemployment and the target rate of capacity utilization |
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Term
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Definition
| the rate at which factories and machines are operating compared to maximum sustainable rate at which the could be used |
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Term
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Definition
| a 1 percentage point change in the unemployment rate will be associated with a 2 percent change in output in the opposite direction |
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Term
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Definition
| a continual rise in the price level |
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Term
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Definition
| a number that summarizes what happens to a weighted composite of prices f a sleection of goods (often called a market basket of goods) over time |
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Term
| GDP deflator (gross domestic product deflator) |
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Definition
| an index of the price level of agregate output, or the average price of the components in total output (or GDP), relative to a base year |
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Term
| consumer price index (CPI) |
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Definition
| measures the prices of a fixed basket of consumer goods, weighted according to each compontents share of an average consumer's expenditures |
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Term
| personal consumption expenditure (PCE) deflator |
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Definition
| a measure of prices of goods that consumers buy that allows yearly changes in the basket of goods that reflect actual consumer purchasing habits |
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Term
| producer price index (PPI) |
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Definition
| an index of prices that measures average change in the selling prices received by domestic prducers of goods and services over time |
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Term
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Definition
| the total amount of goods and services produced, adjusted for price-level changes |
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Term
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Definition
| the total amount of goods and services measured at current prices |
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Term
| how do you find "real" amount |
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Definition
| nominal amount divided by the price index |
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Term
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Definition
| inflation people expect to occur |
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Term
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Definition
| inflation that surprises people |
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Term
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Definition
| when inflation hits triple digits |
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Term
| national income accounting |
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Definition
| a st of rules and definitions for measuring economic activity in the aggregate economy |
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Term
| gross domestic product (GDP) |
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Definition
| the total market value of all final goods and services produced in the economy in a one-year period |
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Term
| gross national product (GNP) |
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Definition
| the aggregate final output of citizends and buisnesses of an economy in a one-year period |
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Term
| net foreign factor income |
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Definition
| the income from foreign domestic factor sources minus foreign factor income earned annually |
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Term
| two important aspects to remember about GDP |
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Definition
1. GDP represents a flow
2. GDP represents the market value of final output |
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Term
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Definition
| a balance sheet of an economy's stock of assets and liabilities |
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Term
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Definition
| goods and services puchased for final use |
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Term
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Definition
| products used as input in the production of some other product |
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Term
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Definition
| the increase in value that a firm contributes to a product or service |
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Term
| personal consumption expenditures |
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Definition
| payments by households for goods and services |
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Term
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Definition
| business spending on equipment, structures, and incentories and household spending on new owner-occupied housing |
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Term
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Definition
| the decrease in an asset's value |
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Term
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Definition
| gross private domestic investment minus depreciation |
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Term
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Definition
| government payments for goods and services and investment in equipment and structures |
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Term
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Definition
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Term
| net domestic product (NDP) |
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Definition
| the sum of consumption expenditures, goverment expenditures, net foreign expenditures, and investment less depreciation |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| national income plus net transfer payments from government minus amounts attributed but not received |
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Term
| disposable personal income |
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Definition
| personal income minus perosnal income taxes and other personal taxes |
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Term
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Definition
| GDP calculated at existing prices |
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Term
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Definition
| nominal GDP adjusted for inflation |
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Term
| limitations of national income accounting |
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Definition
1. measurement problems exist
2. GDP measuers ecomomic activity, not welfare
3. subcategories are often interdependant |
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