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Economics-Mankiw-P1
Definitions of the newest Mankiw (Special edition with financial crisis) Ch. 1-3
| Question | Answer |
|---|---|
| Efficiency | The property of society getting the most it can from scarce resources (Size of economic cake) |
| Equity | The property of distributing economic prosperity fairly among the members of society (How the cake is divided) |
| Opportunity cost | Whatever must be given up to obtain some item |
| Marginal changes | Small incremental adjustments to a plan of action |
| Market economy | An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and service |
| Market failure | A situation in which a market left on its own fails to allocate resources efficently |
| Externality | The uncompensated impact of one person's actions on the well-being of a bystander |
| Market power | The ability of a single economic agent (or small group of agents) to have a substantial influence on market prices |
| Productivity | The quantity of goods and services produced from each hour of a worker's time |
| Inflation | An increase in the overall level of prices in the economy |
| Phillips curve | a curve that shows the short-run trade-off between inflation and unemployment |
| Business cycle | fluctuations in economic activity, such as employment and production |
| Circular-flow diagram | a visual model of the economy that shows how money and production inputs and outputs flow through markets among households and firms (Draw it?P.23) |
| Production possibilities frontier | a graph that shows the combinations of outputs the economy can possibly produce given the available factors of production and the available production technology |
| Microeconomics | the study of how households and firms make decisions and how they interact in specific markets |
| Macroeconomics | the study of economy-wide phenomena, including inflation, unemployment and economic growth |
| Positive statement | claims that tempt to describe the world as it is |
| Normative statement | claims that attempt to prescribe how the world should be |
| Absolute advantage | the comparison among producers of a good according to their productivity |
| Comparative advantage | the comparison among producers of a good according to their opportunity cost |
Created by:
Medardus
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