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MACRO EXAM ONE
| Question | Answer |
|---|---|
| Economics | The study of how humans make decisions in the face of scarcity |
| Scarcity | limits, humans wants for goods, services, and resources exceed what is available |
| Factors of production | Labor, Capital, land, Entrepreneurial Ability |
| Division of labor | the way in which different workers divide required tasks to produce a good or service |
| Specialization | When workers or firms focus on particular task or which they are well suited within the overall production process |
| Adam Smith | Wrote the Wealth of Nations, came up with division of labor and specialization of labor |
| Specialization of Labor | Producing only a single part of a product very well |
| Microeconomics | Refers to individual units, one product, one household, small scale |
| Macroeconomics | Big scale economics, countries |
| Fiscal Policy | When any form of the government is manipulating the Economy (taxes) |
| Monetary policy | Conducted by the nations central bank, ours is the FED and not a part of the government |
| Circular Flow Diagram | a diagram that views the economy as consisting of households and firms interacting in a goods and services marker and a labor market |
| Command Economies | an economy where economic decisions are passed down from the government authority and where the government owns the resources (commuism) |
| Market Economies | an economy where economic decisions are decentralized, private individuals own resources and businesses supply goods and services based on demand |
| Market | Interaction between potential buys and sellers a combination of demand and supply |
| Underground Economies | A market where the buyers and sellers make transactions in violation of one or more gov. regulations |
| Globalization | the trend in which buying and selling in markets have increasingly crossed national borders |
| Imports | products (goods and services) made abroad and then sold domestically |
| Exports | products made domestucally and sold abroad |
| GDP | Gross domestic product, measure of the size of the total production of an entire economy |
| Budget Constraint | all possible consumption combinations of goods that someone can afford, given the prices of goods, when all income is spent, the boundary of opportunity set |
| Opportunity cost | measures cost by what we give up/forfeit in exchange, opportunity cost measures the value of the forgone activity |
| Marginal Analysis | examination of decision on the margin, examining a little more or less from the status quo |
| Utility | the happiness and satisfaction we get when we use a good or service |
| Law of diminishing marginal utility | as we consume consecutive units of a product at some point our added joy will start o decrease at a certain point |
| Production possibilities frontier | a diagram that shoes the productively efficient combination of two products that an economy can produce given the resources it has available |
| Law of diminishing returns | as we add additional increments of resources to producing a good or service, the marginal benefit from those additional increments will decline |
| Positive Statement | statement that describes the world as it is |
| Normative Statement | Statement which describes the world should be |
| Invisible hand | Adam Smith's concept that individuals self-interested behavior can lead to positive social outcomes |
| Demand | the relationship between price and the quantity demanded of a certain good or service |
| Price | what a buyer pays for a unity of the specific good or service |
| Quantity Demanded | Specific demand at each point |
| Law of demand | the common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a together quantity demanded, while all other variables are held constant |
| Demand Schedule | a table that shows a range of prices for a certain good or service and the quantity demanded at each price |
| Demand Curve | A graphic representation of the relationship between price and quantity demanded of a certain good or service, with quantity on the horizontal axis and price on the vertical axis |
| Supply | the relationship between price and the quantity supplied if a certain good or service |
| Quantity Supplied | Specific supply at each point |
| Supply Schedule | a table that shows a range of prices for a certain good or service and the quantity supplied at each price |
| Supply curve | A graphic representation of the relationship between price and quantity supplied of a certain good or service, with quantity on the horizontal axis and price on the vertical axis |
| Equilibrium | Where qD and qS are equal, the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change |
| Surplus | at the existing price, quantity supplied exceeds the quantity demanded; also called excess supply |
| Shortage | at the existing price, the quantity demanded exceeds the quantity supplied; also called excess demand |
| Ceteris Paribus | other things being equal |
| Determinates of demand | Change in income Change in taste and preferences The price of a related good Change in number of buyers |
| Determinates of supply | Changes in prices of inputs (Cost Production) Changes in weather Changes in Tech Changes in government policies |
| Consumer Surplus | When the buyer can buy the product for less than they were willing to pay |
| Producer Surplus | When the seller sells product for more than they were willing to |
| Goals of the Economy (USA) | Economic Growth Low Unemployment Low Inflation |
| Real GDP | measures the value of the goods and services produced by an economy in a specific period, adjusted for inflation |
| GDP=C+I+G+XN | C= Personal Consumption Expenditures I = Gross private domestic investment G= Government consumption expenditures and gross investment XN = Net exports of goods and services (exports minus imports) |
| Transfer payments | Money that is given with no expectation in returns, not in GDP |
| Double Counting | A potential mistake to avoid in measuring GDP, in which output is counted more than once as it travels through the stages of production |
| Nominal | the economic stat actually announces at the time, not adjusted for inflation |
| Real | an economic stat actually announced after it as been adjusted for inflation |
| Recession | a significant decline in national output |
| Depression | An especially lengthy and deep decline in output |
| Business Cycle | the economy's relatively short-term movement in and our of recession |
| Exchange rates | the rate at which one currency can be exchanged for another between nations or economic zone |
| GDP per capita | GDP divided by the population |
| Living Standard | all elements that affect people's happiness, whether people buy or sell these elements in the market or not |
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studyrobert
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