Micro and Macro Economics Flashcards

Flashcards based on micro and macro economics lecture notes.

What is microeconomics?

Studies how individual businesses use resources and how it affects prices and choices.

What is macroeconomics?

Studies the economy as a whole and how government decisions influence it.

What is a market in economics?

A place or system where buyers and sellers meet to trade goods or services.

Who are economic agents?

People or groups who make decisions in the economy, such as households, firms, and the government.

What do households want as economic agents?

Low prices and good quality.

What do workers want?

Good working conditions and high wages.

What is the goal of firms (businesses)?

To make as much profit as possible.

What does the government want in the economy?

A strong economy with jobs for everyone and better markets.

What are the three key allocation decisions in economics?

What to produce, how to produce, and who will buy the product produced.

What is an economic system?

The way a country is organized to decide how to use its money and resources.

What is a planned economy?

The government owns everything and makes all the decisions.

What is a market economy?

Businesses and people own everything, and consumers decide what gets made.

What is a mixed economy?

The government and private businesses both make decisions and own things.

What is a price mechanism?

How buyers and sellers make choices that affect what gets made and how resources are used.

What does capital-intensive mean?

Using more machines and equipment than people to make something.

What does labor-intensive mean?

Using more people than machines to make something.

What is demand?

How much people want and can pay for a product.

What is supply?

How much of a product businesses are willing and able to sell.

What is market equilibrium?

When the amount people want to buy equals the amount available to sell at a certain price.

What is market disequilibrium?

When the amount people want to buy doesn’t match how much is available at a certain price.

What does the Demand Curve show?

Shows how much of a product people want to buy at different prices.

What is an extension on the demand curve?

More is demanded because price is lower.

What is a contraction on the demand curve?

Less is demanded because price is higher.

What are inferior goods?

People buy less when their income goes up.

What are normal goods?

People buy more when their income goes up.

What happens to the supply curve during an increase in supply?

A shift to the right.

What happens to the supply curve during a decrease in supply?

A shift to the left.

What is equilibrium?

The amount people want to buy is the same as the amount being sold.

What is disequilibrium?

Any other price where the amount people want to buy doesn’t match what’s being sold.

What is a surplus?

Too many products and not enough people want them, so sellers lower the price.

What is a shortage?

Not enough products but many people want them, so buyers offer more money.