Introduction to Economics

These flashcards cover key vocabulary terms and definitions from the introductory economics lecture.

Economics

The study of how humans make choices under conditions of scarcity.

Scarcity

When human wants for goods and services exceed the available supply.

Microeconomics

The branch of economics that focuses on actions of individual agents, such as households and firms.

Macroeconomics

The branch of economics that focuses on the whole economy, including issues like inflation, growth, and unemployment.

Division of Labor

The way in which the work required to produce a good or service is divided into tasks performed by different workers.

Command Economy

An economy where economic decisions are made by government authority and resources are owned by the government.

Market Economy

An economy where economic decisions are decentralized, resources are owned by private individuals, and goods and services are supplied based on demand.

Traditional Economy

An economy that relies on customs, history, and time-honored beliefs, typically involving agriculture.

Globalization

The trend in which buying and selling in markets increasingly cross national borders.

Gross Domestic Product (GDP)

A measure of the size of total production in an economy.

Economies of Scale

When the average cost of producing each individual unit declines as total output increases.

Fiscal Policy

Economic policies that involve government spending and taxes.

Monetary Policy

Policy that involves altering the level of interest rates and the availability of credit in the economy.

Specialization

When workers or firms focus on particular tasks for which they are well-suited.

Imperfect Information

A term used by economists to describe the situation where the available information is not complete, affecting decision-making.

Labor Market

The market in which households sell their labor as workers to business firms or other employers.

Shortage

A situation in which the quantity demanded exceeds the quantity supplied at a certain price.

Exports

Products (goods and services) made domestically and sold abroad.

Imports

Products (goods and services) made abroad and then sold domestically.

Private Enterprise

A system where the means of production are owned and operated by private individuals or groups.

Theory

A simplified representation of how two or more variables interact with each other.