MICROECONOMICS

Imports

________ are the goods and services that one produces abroad and then sells domestically.

Exports

________ are the goods and services that one produces domestically and sells abroad.

John Maynard Keynes

________ (1883- 1946), one of the greatest economists of the twentieth century, pointed out that economics is not just a subject area but also a way of thinking.

Market economies

________ are based on private enterprise: the private individuals or groups of private individuals own and operate the means of production (resources and businesses)

tradition

Because ________ drives the way of life, there is little economic progress or development.

Households

________ sell their labor as workers to firms in return for wages, salaries, and benefits.

theory

A(n) ________ is a simplified representation of how two or more variables interact with each other.

Firms

________ produce goods and services, which they sell to households in return for revenues.

Scarcity

________ means that human wants for goods, services and resources exceed what is available.

Adam Smith

The formal study of economics began when ________ (1723- 1790) published his famous book The Wealth of Nations in 1776.

Regulations

________ always define the "rules of the game "in the economy.

Smith

________ introduces the concept of division of labor, which means that the way one produces a good or service is divided into a number of tasks that different workers perform, instead of all the tasks being done by the same person.

command economy

In a(n) ________, the government decides what goods and services will be produced and what prices it will charge for them.

Gross domestic product

________ (GDP) measures the size of total production in an economy.

labor market

In the ________, households provide labor and receive payment from firms through wages, salaries, and benefits.

market economy

In a(n) ________, decision- making is decentralized.

It pictures the economy as consisting of two groups-households and firms-that interact in two markets

The circular flow diagram shows how households and firms interact in the goods and services market, and in the labor market

Market economies are based on private enterprise

the private individuals or groups of private individuals own and operate the means of production (resources and businesses)

Regulations

The Rules of the Game

command economy

an economy where economic decisions are passed down from government authority and where
the government owns the resources

division of labor

the way in which different workers divide required tasks to produce a good or service

economics

the study of how humans make choices under conditions of scarcity

globalization

growth to a global or worldwide scale

imports

products (goods and services) made abroad and then sold domestically

labor market

the market in which workers compete for jobs and employers compete for workers

macroeconomics

the branch of economics that studies the overall working of a national economy

microeconomics

the branch of economics that studies the economy of consumers or households or individual firms

specialization

when workers or firms focus on particular tasks for which they are well-suited within the overall
production process

theory

a well-substantiated explanation of some aspect of the natural world; an organized system of accepted knowledge that applies in a variety of circumstances to explain a specific set of phenomena

underground economy

a market where the buyers and sellers make transactions in violation of one or more