Basic Concepts to Macroeconomics

Flashcards summarizing key concepts from the study of economics.

What is the definition of economics?

Economics is the study of how individuals and societies choose to allocate scarce resources.

What is considered the basic problem of economics?

Scarcity is considered the basic problem of economics.

What are the three basic questions every economic system must answer?

What will be produced? How will we produce it? How will it be distributed?

What do economists use to simplify, analyze, and predict human behavior?

Economists use models, including graphs and mathematical models.

What does ceteris paribus mean?

Ceteris paribus means 'all else being equal'.

What type of analysis is objective and fact-based in economics?

Positive analysis is objective and fact-based.

What distinguishes normative analysis from positive analysis?

Normative analysis focuses on what should happen or the desirability of actions.

What are the two disciplines of economics?

Microeconomics and macroeconomics.

What does microeconomics study?

Microeconomics examines interactions of buyers and sellers in individual markets.

What does macroeconomics focus on?

Macroeconomics examines the interactions and behavior of entire nations' economies.

What is the role of incentives in economics?

Incentives are rewards or punishments that influence the behavior of individuals and businesses.

What is opportunity cost?

Opportunity cost is the value of the next best alternative that is given up when a decision is made.

What is a market economy?

A market economy is an economic system where decisions regarding investment, production, and distribution are based on supply and demand.

What does the term 'demand' refer to in economics?

Demand refers to the quantity of a product or service that consumers are willing and able to purchase at different prices.

What is supply in economic terms?

Supply is the total amount of a good or service that producers are willing to sell at different prices.

What is equilibrium price?

Equilibrium price is the price at which the quantity of a good demanded by consumers equals the quantity supplied by producers.

What is a monopoly?

A monopoly is a market structure where a single seller dominates the market for a particular good or service.

What does GDP stand for and what does it measure?

GDP stands for Gross Domestic Product and it measures the total value of all goods and services produced in a country within a specific time period.

What is inflation?

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.

What is fiscal policy?

Fiscal policy is the use of government spending and taxation to influence the economy