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EconomicsNicky Ch 1

The economic problem - definitions

QuestionAnswer
independent variable the variable in a causal relationship that causes change in another variable
Microeconomics the branch of economics that focuses on the behaviour of individual participants in various markets
Macroeconomics the branch of economics that takes a wide-ranging view of the economy, studying the behaviour of economic sectors
economics the study of how to distribute scarce resources to make choices
economic models generalizations about or simplifications of economic reality; also known as laws, principles, or theories
variables factors that have measurable values
dependent variable the variable in a causal relationship that is affected by another variable
inverse relationship a change in the independent variable causes a change in the opposite direction of the dependent variable
ceteris paribus (pronounced kay’-teh-rees pah’-ri-bus) the assumption that all other things remain the same
positive economics the study of economic facts and why the economy operates as it does
normative economics the study of how the economy ought to operate
utility the satisfaction gained from any action
self-interest motive the assumption that people act to maximize their own welfare
opportunity cost the utility that could have been gained by choosing an action’s best alternative
production possibilities schedule a table that shows the possible output combinations for an economy
production possibilities curve a graph that illustrates the possible output combinations for an economy
law of increasing opportunity costs the concept that as more of one item is produced by an economy, the opportunity cost of additional units of that product rises
economic growth an increase in an economy’s total output of goods and services
economic system the organization of an economy, which represents a country’s distinct set of social customs, political institutions, and economic practices
traditional economy an economic system in which economic decisions are made on the basis of custom such as a traditional division of work between women and men.
market economy an economic system based on private ownership and the use of markets in economic decision-making
market a set of arrangements between buyers and sellers of a certain item
product markets markets in which consumer products are traded
resource markets markets in which economic resources are traded
consumer sovereignty the effect of consumer needs and wants on production decisions
command economy an economic system based on public ownership and central planning
modern mixed economy an economic system that combines aspects of a market economy and a command economy; production decisions are made both in private markets and by government
traditional mixed economies economic systems in which a traditional sector coexists with modern sectors
emerging economies economies that have recently exhibited high rates of economic growth and rising average incomes
inflation a rise in the general level of prices
unemployment rate the percentage of a labour force that is involuntarily unemployed
balance-of-payments accounts a summary of all transactions between Canadians and foreigners that involve exchanging Canadian dollars for other currencies
economic efficiency employing scarce resources in such a way as to derive the highest benefit
Created by: 855205366