VocabularyTerms1

VocabularyTerms1 - ECON 0110-Introduction to Macroeconomics...

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ECON 0110—Introduction to Macroeconomics Vocabulary Chapter 1—The Art and Science of Economic Analysis Economics —the study of how people use their scare resources to satisfy their unlimited wants Resources —the inputs, or factors of production, used to produce the goods and services that people want; resources consist of labor, capital, natural resources, and entrepreneurial ability Labor —the physical and mental effort used to produce goods and services Capital —the buildings, equipment, and human skill used to produce goods and services Natural resources —so-called gifts of nature used to produce goods and services; includes renewable and exhaustible resources Entrepreneurial ability —managerial and organizational skills needed to start a firm, combined with the willingness to take risks Wages —payment to resource owners for their labor Interest —payment to resource owners for the use of their capital Rent —payment to resource owners for the use of their natural resources Profit —the reward for entrepreneurial ability; the revenue from sales minus the cost of resources used by the entrepreneur Good —a tangible item used to satisfy human wants Service —an activity used to satisfy human wants Scarcity —occurs when the amount people desire exceeds the amount available at a zero price Market —a set of arrangements through which buyers and sellers carry out exchange at mutually agreeable terms Product market —a market in which a good or service is bought and sold Resource market —a market in which a resource is bought and sold
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Circular - flow model— a diagram that outlines the flow of resources, products, income, and revenue among economic decision makers Marginal —incremental, additional, or extra; used to describe a change in an economic variable Microeconomics —the study of the economic behavior in particular markets, such as that for computers or unskilled labor Macroeconomics —the study of the economics behavior of entire economies Economic theory, or economic model —a simplification of reality used to make predictions about cause and effect in the real world Variable —a measure, such as price or quantity, that can take on different values Other - things-constant assumption —the assumption, when focusing on the relation among key economic variables, that other variables remain unchanged Behavioral assumption —an assumption that describes the expected behavior of economic decision makers, what motivates them Hypothesis —a theory about relationships among key variables Positive economic statement —a statement that can be proved or disproved by reference to facts Normative economic statement —a statement that represents an opinion, which cannot be proved or disproved Association - is-causation fallacy— the incorrect idea that if two variables are associated in time, one must necessarily cause the other
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This note was uploaded on 04/13/2008 for the course ECON 0110 taught by Professor Kenkel during the Spring '08 term at Pittsburgh.

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VocabularyTerms1 - ECON 0110-Introduction to Macroeconomics...

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