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Eco- CH. 1
Intro to Economics
| Question | Answer |
|---|---|
| economics | social science that deals with the problem of solving SCARCITY-the basic economic problem |
| economics focuses... | on satisfying unlimited needs & wants with limited amounts of resources |
| economics (resources...) | are used to produce goods & services (which satisfy needs & wants) |
| RESOURCE (GDP) | anything used to produce goods & services |
| macroeconomics | the study of a nation's economy as a whole. It focuses on the BIG PIC issues such as inflation, unemployment, & eco. growth (GDP) |
| macroeconomics helps explain.... | why economies grow, don't grow, & change |
| microeconomics | the study of isolated choices made by households, firms (businesses), & the government |
| microeconomics focuses on... | how these choices affect the market for GOODS & SERVICES |
| Factors of Production (a.k.a 4 Categories of Resources--Land) | any resource used to produce goods & services that originates in nature (income generated=rent income) |
| Factors of Production (a.k.a 4 Categories of Resources--LABOR) | all human effort both physical & mental used to produce goods & services (income generated=wage income) |
| Factors of Production (a.k.a 4 Categories of Resources--Physical Capital) | any man made objects used to produce goods & services (income generated=interest income) |
| Factors of Production (a.k.a 4 Categories of Resources--Entrepreneurship) | the risk effort & innovation involved in coordinating the first 3 (profit generated=profits) |
| Positive Analysis (ON QUIZ 1) | -answers "what will be or will happen?" -supported by data & facts |
| Normative Analysis (ON QUIZ 1) | -focuses on "what should happen?" -based on opinion |
| 4 Groups that Make Up MACRO Eco. (a.k.a 4 Spending Groups) | -households (consumers) -businesses (firms) -U.S Government -countries |
| 4 Key Elements part of the "Economic Way of Thinking" | -Making assumptions to simplify analysis -Isolating variables-"ceteris paridus"-all other variables are held fixed -Thinking at the margin (marginal chng-small one unit of change in a value) -Rational people respond to incentives-Adam Smith (self-int.) |
| Human Capital (ON QUIZ 1) | knowledge & skills acquired by workers through education & experience |
| 3 Key Economic Questions | -WHAT goods & services to produce? -HOW to produce the goods & services? -WHO are we producing for? |
Created by:
bbell123
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