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EconomicsNicky Ch 1
The economic problem - definitions
| Question | Answer |
|---|---|
| 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 |
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