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Economics Vocab S1
| Question | Answer |
|---|---|
| Scarce | Resources not available in sufficient quantities to satisfy all the various ways a society wants to use it |
| Opportunity cost | Real cost of an item that describes what you must give up in order to get it |
| Microeconomics | The study of how people make decisions and how those decisions interact |
| Macroeconomics | Concerned with the overall ups and down in the economy |
| Economic aggregates | Economic measures that summarize data across many different markets |
| Positive economics | The branch of economic analysis that describes the way the economy actually works |
| Normative economics | makes prescriptions about the way the economy should work |
| Business cycle | The short-run alternative between economic downturns, known as recessions, and economic upturns, known as expansions |
| Depression | Very deep and prolonged downturn |
| Recessions | Periods of economic downturns when output and employment are falling |
| Expansions | Also known as recoveries, periods of economic upturns when output and employment are rising |
| Employment | The number of people currently employed in the economy |
| Unemployment | The number of people who are actively looking for work but aren’t employed |
| Labor Force | Equal to the sum of employment and unemployment |
| Unemployment rate | The percentage of the labor force that is unemployed |
| Output | The quantity of goods and services produced |
| Aggregate output | The economy’s total production of goods and services for a given time period |
| Inflation | Rising overall price level |
| Deflation | Falling overall price level |
| Price Stability | When the aggregate price level is changing only slowly |
| Economic Growth | An increase in the maximum amount of goods and services an economy can produce |
| Model | Simplified representation used to better understand a real-life situation |
| Other things equal (ceteris paribus) assumptions | Means that all other relevant factors remain unchanged |
| Trade-off | When you give up something in order to have something else |
| Production possibilities curve | Illustrates the trade-offs facing an economy that produces only two goods. Its shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced |
| Efficient | An economy in which there is no way to make anyone better off without making at least one person worse off |
| Technology | technical means for producing goods and services |
| Trade | Provide goods and services to others and receive goods and services in return |
| Gains from trade | People can get more of what they want through trade than they could if they tried to be self-sufficient |
| Specialization | Each person specializes in the task that he or she is good at performing, increases output |
| Comparative advantage | When the opportunity cost of producing the good or service is lower for that individual than for other people |
| Absolute advantage | Producing more of a good or service with a given amount of time and resources. Not the same as comparative |
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