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Economics
The social science that studies how people make choices among alternatives.
Goods
Tangible items that can be touched, seen, consumed, and last a long time.
Services
Intangible items that cannot be touched but satisfy a want or need.
Needs
Goods or services that are necessary for survival.
Wants
Goods or services that are not necessary but desired.
Scarcity
The condition of having limited resources and having to choose among alternatives.
Factors of production
The resources used in the production process, including natural resources, capital resources, and human resources.
Opportunity cost
The value of the alternative that is given up when making a choice.
Economics
The study of how society distributes its limited resources.
Microeconomics
The study of individual and business decisions, focusing on supply and demand.
Macroeconomics
The study of the economy as a whole, including factors such as unemployment, inflation, and GDP.
Facts
Verifiable statements that can be confirmed statistically.
Values
Statements based on personal beliefs and opinions.
GDP
Gross Domestic Product, the total value of all final goods and services produced within a country in one year.
Expenditure approach
Calculating GDP by adding up the total spending on goods and services.
Income approach
Calculating GDP by adding up all the income earned by factors of production.
Drawbacks to GDP
Population size, non-market production, underground economy, types of goods produced, leisure, environmental deregulation, and distribution of income.
Production possibilities curve
A graphical representation of the possible output combinations for an economy.
Law of increasing opportunity cost
The concept that as the production of one good increases, the opportunity cost of producing additional units of that good increases.
Economic growth
An increase in the production possibilities of an economy due to more resources or improved technology.
Business cycle
The fluctuations in economic activity, including periods of growth, recession, slump/depression, and recovery.
Saving
Putting money aside for future use.
Investing
Using savings to earn extra income.
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Flashcard (35)