\________- Human- made equipment like machinery as well as buildings, roads, vehicles, and computers.
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entire curve
Changes in demand are when the \________ would shift upwards or downwards.
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Economic growth
\________- The ability to produce a larger total output over time.
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price movement
Change in the quantity demanded only occurs due to change in \________ along the curve.
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Opportunity cost
\________- The value of what was given up.
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Demand
\________ is the entire line with all of the points that make it up.
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Command
\________- Consists of the central planning of the economy which differed in different regions of the world depending on the political regime.
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inverse impact
The cost of production (land, labor, capital) has a(n) \________ on the supply.
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PPC curves
Realistically, \________ are not straight lines and tend to be concave- shaped.
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Macroeconomics
\________: with \________, we consider the big picture- the nations economy as a whole.
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Entrepreneurial ability
\________- The effort and know- how to put the other resources together in a productive venture.
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Consumer expectation
\________ plays a major role in the determination of the price.
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Tradition
\________- Tied to the evolution of economics, and it is related to subsistence and tribal life.
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Increase flexibility
\________ by adapting quickly to changing circumstances and being open to new ideas.
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Shift
\________ in supply is due to the determinants of supply.
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equilibrium price
When supply is constant and only demand increases, \________, and quantity increase.
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Microeconomics
microeconomics filters our scope to individuals in an economy while keeping the overall economy in mind
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Labor
Human effort and talent, physical and mental
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Land or natural resources
Any resource created by nature
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Physical capital
Human-made equipment like machinery as well as buildings, roads, vehicles, and computers
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Entrepreneurial ability
The effort and know-how to put the other resources together in a productive venture
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Tradition
Tied to the evolution of economics, and it is related to subsistence and tribal life
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Command
Consists of the central planning of the economy which differed in different regions of the world depending on the political regime
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Market
Essentially, it is the place in the economy where buyers and sellers perform transactions
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Opportunity cost
The value of what was given up
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Productive efficiency
When the economy is producing the maximum output for a given level of technology and resources
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Allocative efficiency
The economy is producing the optimal mix of goods and services
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Optimal
The combination of goods and services that provides the most net benefit to society
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Market failure
When a market fails to produce the allocative efficient quantity
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Economic growth
The ability to produce a larger total output over time
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Economic contraction
It is when a country's economy shrinks due to factors such as reduced spending by consumers, businesses, or the government
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Law of demand
Holding all else equal, when the price of good rises, consumers decrease the quantity demanded of that good
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GDP
\________ is used to measure the economic growth of a country.
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Gross
\________ domestic product (GDP)- The market value of the final goods and services produced within a nation in a given period.
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Trough
\________- The bottom of the cycle where a contraction has stopped.
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CPI
The \________ is based on a market basket of goods bought by consumers, including the ones produced abroad.
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Peak
\________- The top of a business cycle where an expansion has ended.
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Firm
\________ is any business that produces goods and supplies them to the product market and then receives the payment for those goods.
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Market basket
\________- A collection of goods and services used to represent what is consumed in the economy.
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Goods
\________ evolve- The emergence of new products (smartphones) and the extinction of others (manual typewriters) is understood by firms and consumers, but the market basket must reflect this or it risks becoming irrelevant.
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Recession
\________- Unofficially defined as two consecutive quarters of falling real GDP.
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Business cycles
\________ refer to the fluctuations in economic activity over time.
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individual dollar
It occurs because inflation causes the value of the \________ to decrease over time.
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Consumers
\________ are the people who buy the goods /services in an economy.
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GDP deflator
The \________ includes all items that make up domestic products.
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real GDP
Contraction- A period where \________ is falling.
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Deflation
\________: the general decrease in prices.
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foreign sector
Closed economy- A model that assumes there is no \________ (imports and exports)
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Circular flow of economic activity
A model that shows how households and firms circulate resources, goods, and incomes through the economy
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Closed economy
A model that assumes there is no foreign sector (imports and exports)
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Gross domestic product (GDP)
The market value of the final goods and services produced within a nation in a given period
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Aggregate spending (GDP)
The sum of all spending from four sectors of the economy
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GDP \= C + I + G + (X
M)
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Consumer spending (C)
Spending done by customers
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Investment spending (I)
Investment is defined as current spending to increase output or productivity later
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Government spending (G)
Purchases made by the government for final goods and services and investments in infrastructure
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Aggregate income (AI)
The sum of all income-Wages + Rent + Interest + Profit-earned by suppliers of resources in the economy
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Value-added approach
A third approach to calculating GDP that considers all stages of production of a final good and the value that was added to the final good along the way
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Employed
A person is employed if they have worked for pay at least one hour per week
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Unemployed
A person is unemployed if they are not currently working but are actively seeking work
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Labor force
The sum of all individuals 16 years and older who are either currently employed (E) or unemployed (U)
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Out of the labor force
A person is classified as out of the labor force if they have chosen to not seek employment
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Labor force participation
The ratio of the size of the labor force to the size of the population 16 years and older
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Unemployment rate
The percentage of the labor force that falls into the unemployed category
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Discouraged workers
Citizens who have been without work for so long that they become tired of looking for work and drop out of the labor force
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Frictional unemployment
A type of unemployment that occurs when someone new enters the labor market or switches jobs
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Seasonal unemployment
A type of unemployment that is periodic, predictable, and follows the calendar
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Structural unemployment
A type of unemployment that is the result of fundamental, underlying changes in the economy such that some job skills are no longer in demand
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Cyclical unemployment
A type of unemployment that rises and falls within the business cycle
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Full employment
Exists when the economy is experiencing no cyclical unemployment
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The natural rate of unemployment
The unemployment rate associated with full employment, somewhere between 4 to 6 percent in the United States
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Consumer price index (CPI)
The price index that measures the average price level of the items in the base year market basket
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Deflation
the general decrease in prices
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Inflation
the general increase in prices
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Disinflation
a decrease in the rate of inflation
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Inflation rate
the percentage change in aggregate price level across an entire economy in a year
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Market basket
A collection of goods and services used to represent what is consumed in the economy
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Inflation
The percentage change in the CPI from one period to the next
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The annual rate of inflation on goods consumed by the typical consumer
The percentage change in the CPI from one year to the next
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Nominal income
Todays income is measured in todays dollars
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Real income
Todays income is measured in base year dollars
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Consumer substitute
As the price of goods begins to rise, we know that consumers seek substitutes
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Goods evolve
The emergence of new products (smartphones) and the extinction of others (manual typewriters) is understood by firms and consumers, but the market basket must reflect this or it risks becoming irrelevant
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Quality differences
Some price increases are the result of improvements in quality
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The real rate of interest
The percentage increase in purchasing power that a borrower pays a lender
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Nominal GDP
The value of current production at the current prices
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Real GDP
The value of current production but using prices from a fixed point in time
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Base year
The year that serves as a reference point for constructing a price index and comparing real values over time
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Price index
A measure of the average level of prices in a market basket for a given year, when compared to the prices in a reference (or base) year
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GDP price deflator
The price index that measures the average price level of the goods and services that make up GDP
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The business cycle
The periodic rise and fall in 4 phases present in economic activity
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Expansion
A period where real GDP is growing
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Peak
The top of a business cycle where an expansion has ended
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Contraction
A period where real GDP is falling
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Recession
Unofficially defined as two consecutive quarters of falling real GDP
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Depression
A prolonged, deep contraction in the business cycle
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Trough
The bottom of the cycle where a contraction has stopped
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Macroeconomic equilibrium
\________- Occurs when the quantity of real output demanded is equal to the quantity of real output supplied.
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Marginal propensity
\________ to consume (MPC)- How much people consume rather than save when there is a change in income.
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Supply shocks
\________- An economy- wide phenomenon that affects the costs of firms and the position of the SRAS curve, either positively or negatively.
Studied by 4 people
