This preview shows page 1. Sign up to view the full content.
Unformatted text preview: 2. Circular-flow Diagram Is a visual model of the economy that shows how dollars flow through markets among households and firms. 3. Production Possibilities Frontier A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology. 4. Microeconomics Study of how households and firms make decisions and interact in markets. 5. Macroeconomics Study of economy-wide phenomena including inflation, unemployment, and economic growth. 6. Positive Statements Attempts to describe the world as it is. 7. Normative Statements Attempts to prescribe how the world should be....
View Full Document
- Spring '08