Studied by 47 people
Good
Anything from which individuals receive utility or satisfaction
Utility
The satisfaction one receives from a good
Bad
Anything from which individuals receive disutility or dissatisfaction
Disutility
The dissatisfaction one receives from a bad
Land
All natural resources, such as minerals, forests, water, and unimproved land
Labor
the physical and mental talents that people contribute to the production process
Capital
Produced goods that can be used as inputs for further production, such as factories, machinery, tools, computers, and buildings
Entrepreneurship
The particular talent that some people have for : organizing resources, seeking new business opportunities, and developing new ways of doing things
Scarcity
The condition in which our wants are greater than the limited resources available to satisfy those wants
Economics
The science of how individuals and societies deal with the fact that wants are greater than the limited resources
Opportunity Costs
the most highly valued opportunity or alternative forfeited when a choice is made
Scarcity
Because of this, a scarcity rationing device is needed
Marginal
Another term in economics meaning "Additional"
Marginal Benefits
The benefits connected to consuming an additional unit of a good or undertaking one more unit of an activity.
Marginal Costs
The costs connected to consuming an additional unit of a good or undertaking one more unit of an activity/
Decisions at the Margin
Decision making characterized by weighing the additional (marginal) benefits of a change against the additional (marginal) costs of a change with respect to current conditions.
Incentives
something that encourages or motivates a person to take action
Unintended Effects
a positive or negative outcome that was not anticipated
Exchange/Trade
the process of giving up one thing for another
Ceteris Paribus
a Latin phrase that means "all other things held constant"
Abstract
The process (used in building a theory) of focusing on a limited number of variables to explain or predict an event.
Theory
is an abstract representation of the real world designed with the intent to better understand the world
Positive Economics
The study of "what is" in economic matters
Normative Economics
The study of "what should be" in economics
Microeconomics
the study of the economic behavior and decision making of small units, such as individuals, families, and businesses
Macroeconomics
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
Inflation
increase in the price level and is usually measured on an annual basis
Inflation rate
is the positive percentage change in the price level on an annual basis
Real income
is a person's nominal income adjusted for any change in prices
Price Level
a weighted average of the prices of all goods and services
Price Index
a measure of the price level
Consumer Price Index (CPI)
The weighted average of prices of a specific set of goods and services purchased by a typical household; a widely cited index number for the price level.
Base Year
The year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year.
GDP Implicit Price Deflator
is based upon all goods and services produced in an economy
CPI (Consumer Price Index)
is based upon a representative group of goods and services purchased by a typical household
Civilian Noninstitutional Population (CNP)
All persons age 16 and over who are not in prison, not actively serving in the military and not in long term health facility (institutionalized)
Who are the employed?
• All persons who did any work for pay or profit during the survey reference week.
• All persons who did at least 15 hours of unpaid work in a family-operated enterprise.
• All persons who were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute, or various personal reasons.
Who are the Unemployed?
• All persons who did not have jobs, who made specific active efforts to find a job during the prior four weeks, and who were available for work.
• All persons who were not working and who were waiting to be called back to a job from which they had been temporarily laid off.
Unemployment Rate
the percentage of the labor force that is unemployed
Employment Rate
the percentage of the civilian non institutional population that is employed
Labor Force Participation Rate
the percentage of the civilian non institutional population that is in the civilian labor force
Job loser
a person who was employed in the civilian labor force and was either fired or laid off
Job leaver
a person employed in the civilian labor force who quits his or her job
Reentrant
a person who was previously employed, hasn't worked for some time, and is currently reentering the labor force
New entrant
An individual who has never held a full-time job lasting two weeks or longer but is now seeking employment.
discouraged workers
former workers who are not actively looking for work and are not waiting to be called back to a job or to report for a job
Discouraged workers are/are not counted as unemployed workers
are not
Frictional Unemployment
unemployment due to natural "frictions" of the economy caused by changing market conditions; represented by qualified individuals with transferable skills who change jobs
Structural Unemployment
Unemployment due to structural changes in the economy that eliminate some jobs and create others for which the unemployed are unqualified.
Natural Unemployment
unemployment caused by frictional and structural factors in the economy
Natural unemployment rate
frictional unemployment rate + structural unemployment rate
Full Employment
the condition that exists when the unemployment rate is equal to the natural unemployment rate
Cyclical Unemployment Rate
the difference between the unemployment rate and the natural unemployment rate
Gross Domestic Product
the total market value of all final goods and services produced annually within a country’s borders
Expenditure Approach
Add the amount of money spent by buyers of final goods and services
Income Approach
Add the sum of all incomes earned in producing goods and services
Value-Added Approach
add the value added at each stage of production of all goods and services
Chores performed at home by family members
Underground activities (unrecorded activities paid for in cash or illegal gambling
Sales of used goods
Trading of stocks and bonds
Government transfer payments (supplied as social security)
Leisure time
Not included in GDP
Consumption
The sum of household spending on durable goods, nondurable goods, and services
Durable Goods
Goods that are expected to last for more than three years
Nondurable Goods
Not expected to last for more than three years, such as food
Services
intangible items such as entertainment and car repair
Investment
Sum of all purchases of fixed investment, inventory investment, and purchases of new residential housing
Fixed Investment
Newly produced capital goods, business purchases such as machinery and factories
Inventory Investment
Changes in business inventories (stock of unsold goods)
Government Purchases
Government purchases of goods and services and gross investment in highways, bridges and so on.
Net Exports
Exports Less Imports
Exports
Total foreign spending on domestic gods
Imports
Total domestic spending on foreign goods
National Income
Total income earned by PH citizens and businesses, no matter where they reside or are located.
Compensation of Employees
consists of wages and salaries paid to employees plus employers’ contributions to Social Security and employee benefit plans
Proprietors’ Income
includes all forms of income earned by self-employed individuals and owners of unincorporated businesses
Corporate Profits
include all the income earned by the stockholders of corporations
Rental Income
income received by individuals for the use of their non-monetary assets
Net Interest
interest income received by PH households and government minus the interest they paid out
Net Domestic Product
measures the total value of new goods available in the economy in a given year after worn-out capital goods have been replaced
Peak
Real GDP is at a temporary high at Q1
Contraction
decline in real GDP
Trough
lowest point in Real GDP
Recovery
Real GDP rises from trough and ends at initial peak
Expansion
Increase in Real GDP beyond the recovery
Recession
Two consecutive quarter declines in Real GDP
Note 
Flashcard (31)