Economics Curriculum Core: The Economic Framework

A set of vocabulary flashcards defining key concepts, formulas, and central problems across positive economics, normative economics, microeconomics, and macroeconomics.

Positive Economics

The objective, fact-based study of "what is" regarding economic phenomena, characterized as descriptive, empirical, and verifiable using real-world data.

Normative Economics

The subjective, value-based evaluation of "what ought to be" in policy formulation, heavily based on personal ethics, morality, and social welfare.

Empirical Estimation Model

The model expressed as $Y = f(X, Z) + \bullet$ used in positive economics to test relationships using empirical data.

Social Welfare Maximization Objective

The normative economics framework represented by $W = \sum U_i(X_i)$, focusing on prescribing optimal policies and equity.

Microeconomics

The science of decision-making, resource allocation, and price determination at the individual unit level, such as consumers, firms, and specific markets.

What to Produce?

A central problem in microeconomics involving decisions on which goods and services to produce and in what quantities to satisfy scarce needs.

How to Produce?

A central problem in microeconomics requiring choices between labor-intensive and capital-intensive production techniques to achieve optimal efficiency.

For Whom to Produce?

A central problem in microeconomics determining the distribution of output among segments of society, linked directly to factor pricing.

Macroeconomics

The branch of economics that analyzes economy-wide aggregate parameters, national income, global policies, and system-wide stabilization.

Aggregate Income Identity

The macroeconomic national income accounting identity represented as $Y = C + I + G + (X - M)$.

Full Employment

A primary macroeconomic objective aimed at securing work opportunities for all willing and able resources in the labor force to prevent systemic output loss.

Price Stability

A macroeconomic goal focused on preserving purchasing power by actively managing rates of inflation and deflation via state frameworks.

Economic Growth

A macroeconomic objective focused on promoting a sustained upward trajectory of real GDP and improving social standards of living over time.

Price & Factor Theory

A focus of microeconomics concerned with determining how wages, rent, and profits are established in the market.

Balance of Payments

A scope of macroeconomic analysis that studies trade flows and global exchange rates.