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Definitions |
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lottery
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randomly selected winner
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AN EXTREMELY SEVERE RECESSION.
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DEPRESSION
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founder of modern economics
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Adam smith
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protectionism
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fostering domestic industry by protecting them from foreign competition through duties on imports
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scarcity
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a lack of goods or services
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NNP
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net national product- gross national produt minus depreciation
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Market
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Location or other mechanism (internet) that allows buyers and sellers to exchange economic products
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exchanging one thing for another
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trade off
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Hegemony
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international system with one dominant state taking dominant organization and management of economic world
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Product Market
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The market in which households purchase the goods and services that firms produce
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budget deficit
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a financial situation in which spending is greater than income or revenues
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profit
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the amount of money a business receives in excess of its expenses
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Cyclical Unemployment
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*the fluctuating unemployment over the business cycle that increases during a recession and decreases during an expansion*cyclical unemployment is not considered to be natural*when cyclical unemployment is present, the economy is not considerd to be fully employed*when the unemployment rate is above 6%
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Gross Investment
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total investment expenditure in a given time period
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MENTAL OR PHYSICAL LABOR OR HELP PURCHASED BY CONSUMERS. EXAMPLES ARE THE ASSISTANCE OF PHYSICIANS, LAWYERS, DENTISTS, REPAIR PERSONNEL, HOUSECLEANERS, EDUCATORS, RETAILERS, AND WHOLESALERS; ITEMS PURCHASED OR USED BY CONSUMERS THAT DO NOT HAVE PHYSICAL
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SERVICES
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Actual GDP tends to converge to potential GDP.
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Long-run
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Profit Maximization
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SR- Maximized where MR=MC, economic profit is possible and TR>TC by maximum amount. LR- MR=MC=ATC, economic profit is zero and a normal return is realized.
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Public good
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Economic product that is consumed collectively; highways, national defense, police and fire protection.
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demand
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the desire to purchase, coupled with the power to do so.
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supply
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the quantities of a resource you have (amount of steel, rubber to make tires)
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free market economy
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system in which individuals and businesses are free to make their own economic choices; also called free enterprise economy
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Is pollution an example of a positive externality or a negative externality?
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Negative
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If investment spending (I) goes up, AD shifts...
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RIGHT
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Market economy
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An economy in which the government decides how economic resources will be allocated.
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depression
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a state of the economy with large numbers of people out of work, acute shortages, and excess capacity in manufacturing plants
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THE INFLATION RATE THAT WE BELIEVE WILL OCCUR; WHEN IT DOES, WE ARE IN A SITUATION OF FULLY ANTICIPATED INFLATION.
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ANTICIPATED INFLATION
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Frictional Unemployment
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A brief time period of unemployment which is caused by either a) new job searcher or b) waiting for a job or company to call you or c) between jobs or looking for better job
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Price Elasticity of Supply
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=%Change Q supplied/%Change in Price
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marginal utility
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the extra satisfaction derived by a consumer from the consumption of the last unit of a commodity
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deals with the relationship between the factors of production and the output of goods and services
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theory of production
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currency
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any kind of money that people in a country use for trade
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Increase in productivity. Graph will...
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Shift to the right
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Current dollar
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dollar amounts or prices that are not adjusted for inflation
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leading economic indicators
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measures that usually predict or lead to recessions or expanions
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Want vs Need
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NEED - basic requirement for survival (food, clothing, shelter) WANT - way of expressing a need ( to satify a NEED for food, a person may WANT pizza)
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dollars that are adjusted in a way that removes the distortion of inflation
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REAL/CONSTANT DOLLARS
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Paper money in the US is called:
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Federal Reserve notes
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certificate of deposit
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Receipt showing that an investor has made an interest-bearing loan to a financial institution.
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balanced reciprocity
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A mode of exchange in which the giving and the receiving are specific as to the value of the goods and the time of their delivery.
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budget surplus and deficit
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• A balanced budget is when government spending equals tax revenue (G = T). • A budget deficit involves a net excess of government spending over tax revenue (G > T). A budget deficit is associated with expansionary fiscal policy.• A budget surplus occurs when government spending is less than tax revenue(G A budget surplus increases the supply of loanable funds, reduces real interest rates, and increases the amount of investment in an economy.
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Forces that Shift the AD Curve: Recall: AD = C+I+G+X-M
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*business profit expectations (I)*fiscal policy (C,G) - Taxes, transfer payments, government expenditures*monetary policy (C,I)*value of the dollar in foreign exchange market (X,M)*foreign nations/imports (X)
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A RATE OF RETURN THAT IS MEASURED IN TERMS OF REAL GOODS AND SERVICES; THAT IS, AFTER THE EFFECTS OF INFLATION HAVE BEEN FACTORED OUT.
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INFLATION-ADJUSTED RETURN
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Short Run
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A period of time short enough that the quantities of at least some of the resources cannot be varied. At least one resource is fixed.
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Allocation of Goods
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is the problem that must be solved in all economic systems.
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what basic ideas are fundamental to american free enterpriese
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economic freedom, private property, contracts, voluntary exchange, self interest, profit motive and competition
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iron law of wages
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the doctrine or theory that wages tend toward a level sufficient only to maintain a subsistence standard of living
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What polling error in 1948 was partly responsible for the widespread assumption that Thomas E. Dewey would defeat Harry S. Truman?
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Pollsters stopped interviewing the public several weeks before the election.
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An economic model
a) can never be proven wrong
b) often omits crucial elements
c) simplifies reality in order to focus on crucial elements
d) uses equations to understand normative economic phenomena
e) produces poor predictions since they includ
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c) simplifies reality in order to focus on crucial elements
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What segments of the economy make up the aggregate demand curve?
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The quantity of total output (GDP) demanded (purchased) at alternative average price levels.
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the saving habits of ben and arthur best illustrate which principle of saving
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rate of return matters, the length of time money is invested matters
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