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Macro Chapter 2
| Term | Definition |
|---|---|
| positive statement | an assertion that can be tested and validated; it describes "what is" (page 29) |
| normative statement | an opinion that cannot be tested or validated; it describes "what ought to be" (page 29) |
| ceteris paribus | meaning "other things being equal," the concept under which economists examine a change in one variable while holding everything else constant (page 30) |
| endogenous factors | the variables that can be controlled for in a model (page 31) |
| exogenous factors | the variables that cannot be controlled for in a model (page 31) |
| production possibilities frontier | a model that illustrates the combinations of outputs that a society can produce if all of its resources are being used efficiently (page 33) |
| law of increasing opportunity cost | law stating that the opportunity cost of producing a good rises as a society produces more of it (page 36) |
| specialization | limiting one's work to a particular area (page 39) |
| absolute advantage | the ability of one producer to make more than another producer with the same quantity of resources (page 41) |
| consumer goods | goods produced for present consumption (page 47) |
| capital goods | goods that help produce other valuable goods and services in the future (page 47) |
| investment | the process of using resources to create or buy new capital (page 47) |
| variable | a quantity that can take on more than one value (page 57) |
| scatterplot | a graph that shows individual (x,y) points (page 60) |
| negative correlation | condition occurring when two variables move in opposite directions (page 60) |
| positive correlation | condition occurring when two variables move in the same direction (page 60) |
| slope | the change in the rise along the y axis (vertical) divided by the change in the run along the x axis (horizontal) (page 61) |
| causality | condition existing when one variable influences another (page 65) |
| reverse causation | condition occurring when causation is incorrectly assigned among associated events (page 66) |
| Factors that Shift Demand | PYNTE- Price of related goods, Income changes, Number of buyers, Taste and preferences, Expectations of future prices |
| Factors that Shift Supply | SPENT- Subsidies and Taxes, Price of inputs, Expectations of price changes, Number of Supplies, Technology |
Created by:
v.virgil
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