AP Macro Unit 1 (all vocab)

0.0(0)
studied byStudied by 6 people
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/89

flashcard set

Earn XP

Description and Tags

from Krugman's Economics for AP®

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

90 Terms

1
New cards
capital
manufactured goods used to make other goods and services.
2
New cards
command economy
an economy in which industry is publicly owned and a central authority makes production and consumption decisions.
3
New cards
economic aggregates
economic measures that summarize data across many different markets.
4
New cards
economics
the study of scarcity and choice.
5
New cards
economy
a system for coordinating a society's productive and consumptive activities.
6
New cards
entrepreneurship
the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.
7
New cards
incentives
rewards or punishments that motivate particular choices.
8
New cards
individual choice
decisions by individuals about what to do, which necessarily involve decisions about what not to do.
9
New cards
labor
the effort of workers.
10
New cards
land
all resources that come from nature, such as minerals, timber, and petroleum.
11
New cards
macroeconomics
the branch of economics that is concerned with the overall ups and downs of the economy.
12
New cards
marginal analysis
the study of the costs and benefits of doing a little bit more of an activity versus a little bit less.
13
New cards
market economy
an economy in which the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions.
14
New cards
microeconomics
the branch of economics that studies how individuals, households, and firms make decisions and how those decisions interact.
15
New cards
normative economics
the branch of economic analysis that makes prescriptions about the way the economy should work.
16
New cards
opportunity cost
the real cost of an item: what you must give up in order to get it.
17
New cards
positive economics
the branch of economic analysis that describes the way the economy actually works.
18
New cards
property rights
establish ownership and grant individuals the right to trade goods and services with each other.
19
New cards
resource
anything that can be used to produce something else.
20
New cards
scarce
in short supply; when a resource is not available in sufficient quantities to satisfy all the various ways a society wants to use it.
21
New cards
aggregate output
the economy's total production of goods and services for a given time period.
22
New cards
business cycle
the alternation between economic downturns, known as recessions, and economic upturns, known as expansions.
23
New cards
deflation
a falling overall price level.
24
New cards
depression
a very deep and prolonged downturn.
25
New cards
economic growth
an increase in the maximum amount of goods and services an economy can produce.
26
New cards
employment
the number of people who are currently working for pay in the economy.
27
New cards
expansion
a period of economic upturn in which output and employment are rising; also referred to as recovery.
28
New cards
inflation
a rising overall price level.
29
New cards
labor force
the number of people who are either actively employed for pay or unemployed and actively looking for work; the sum of employment and unemployment.
30
New cards
model
a simplified representation used to better understand a real-life situation.
31
New cards
other things equal assumption
in the development of a model, the assumption that all other relevant factors remain unchanged; also known as the ceteris paribus assumption.
32
New cards
output
the quantity of goods and services produced.
33
New cards
price stability
when the overall price level is changing only slowly if at all.
34
New cards
recession
a period of economic downturn when output and employment are falling.
35
New cards
unemployment rate
the percentage of the labor force that is unemployed.
36
New cards
unemployment
the number of people who are actively looking for work but aren't currently employed.
37
New cards
allocative efficiency
achieved by an economy if it produces at the point along its production possibilities curve that makes consumers as well off as possible.
38
New cards
efficient
describes a market or economy in which there is no way to make anyone better off without making at least one person worse off.
39
New cards
production possibilities curve
illustrates the trade-offs facing an economy that produces only two goods; shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced.
40
New cards
productive efficiency
achieved by an economy if it produces at a point on its production possibilities curve.
41
New cards
technology
the technical means for producing goods and services.
42
New cards
trade-off
when you give up something in order to have something else.
43
New cards
absolute advantage
the advantage conferred by the ability to produce more of a good or service with a given amount of time and resources; not the same thing as comparative advantage.
44
New cards
comparative advantage
the advantage conferred by an individual if the opportunity cost of producing the good or service is lower for that individual than for other people.
45
New cards
gains from trade
an economic principle that states that people can get more of what they want through trade than they could if they tried to be self-sufficient; this increase in output is due to specialization.
46
New cards
specialization
each person specializes in the task that he or she is good at performing.
47
New cards
terms of trade
indicate the rate at which one good can be exchanged for another.
48
New cards
trade
when individuals provide goods and services to others and receive goods and services in return.
49
New cards
change in demand
a shift of the demand curve, which changes the quantity demanded at any given price.
50
New cards
competitive market
a market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold.
51
New cards
complements
two goods (often consumed together) for which a rise in the price of one of the goods leads to a decrease in the demand for the other good.
52
New cards
demand curve
a graphical representation of the demand schedule. It shows the relationship between quantity demanded and price.
53
New cards
demand schedule
shows how much of a good or service consumers will be willing and able to buy at different prices.
54
New cards
individual demand curve
illustrates the relationship between quantity demanded and price for an individual consumer.
55
New cards
inferior good
when a rise in income decreases the demand for a good; usually considered less desirable than more expensive alternatives.
56
New cards
law of demand
the "law" that a higher price for a good or service, other things being equal, leads people to demand a smaller quantity of that good or service.
57
New cards
movement along the demand curve
a change in the quantity demanded of a good that is the result of a change in that good's price.
58
New cards
normal good
when a rise in income increases the demand for a good; most goods are normal goods.
59
New cards
quantity demanded
the actual amount of a good or service consumers are willing and able to buy at some specific price.
60
New cards
substitutes
two goods for which a rise in the price of one of the goods leads to an increase in the demand for the other good.
61
New cards
supply and demand model
a model of how a competitive market works.
62
New cards
change in supply
a shift of the supply curve, which changes the quantity supplied at any given price.
63
New cards
individual supply curve
illustrates the relationship between quantity supplied and price for an individual producer.
64
New cards
input
a good or service that is used to produce another good or service.
65
New cards
law of supply
the "law" that, other things being equal, the price and quantity supplied of a good are positively related.
66
New cards
movement along the supply curve
a change in the quantity supplied of a good arising from a change in the good's price.
67
New cards
quantity supplied
the actual amount of a good or service people are willing to sell at some specific price.
68
New cards
supply curve
shows the relationship between the quantity supplied and the price.
69
New cards
supply schedule
shows how much of a good or service producers would supply at different prices.
70
New cards
equilibrium price (market-clearing price)
the price of a good at which the quantity demanded of that good equals the quantity supplied of that good.
71
New cards
equilibrium quantity
the quantity of a good bought and sold at its equilibrium price.
72
New cards
equilibrium
an economic situation when no individual would be better off doing something different; a competitive market is in equilibrium when the price has moved to a level at which the quantity demanded of goods equals the quantity supplied of that good.
73
New cards
surplus
when the quantity supplied of a good or service exceeds the quantity demanded; occurs when the price is above its equilibrium level and is also known as excess supply.
74
New cards
deadweight loss

the value of foregone mutually beneficial transactions.

75
New cards
demand price

the price of a given quantity at which consumers will demand that quantity.

76
New cards
license

gives its owner the right to supply a good or service; a form of quantity control, as only those who are licensed can supply the good or service.

77
New cards
quantity control (quota)

an upper limit on the quantity of some good that can be bought or sold.

78
New cards
quota rent

the earnings that accrue to the license-holder from ownership of the right to sell the good.

79
New cards
supply price

the price of a given quantity at which producers will supply that quantity.

80
New cards
wedge

the difference between the demand price and the supply price of a good, often created by a quota.

81
New cards
price controls
legal restrictions on how high or low a market price may go; typically take the form of either a price ceiling or a price floor.
82
New cards
black market
a market in which goods or services are bought and sold illegally--either because it is illegal to sell them at all or because the prices charged are legally prohibited by a price ceiling.
83
New cards
inefficient allocation of sales among sellers
a form of inefficiency resulting from price floors in which those who would be willing to sell the good at the lowest price are not always those who manage to sell it.
84
New cards
inefficient allocation to consumers
a form of inefficiency often resulting from price ceilings in which people who want a good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are only willing to pay a relatively low price do get it.
85
New cards
inefficiently high quality
a form of inefficiency resulting from price floors in which sellers offer high-quality goods at a high price, even though buyers would prefer a lower quality at a lower price.
86
New cards
inefficiently low quality
a form of inefficiency resulting from price ceilings in which sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price.
87
New cards
minimum wage
a legal floor on the hourly wage rate paid for a worker's labor.
88
New cards
price ceiling
a maximum price that sellers are allowed to charge for a good or service.
89
New cards
price floor
a minimum price that buyers are required to pay for a good or service.
90
New cards
wasted resources
a form of inefficiency in which people expend money, effort, and time to cope with the shortages caused by the price ceiling or surpluses caused by the price floor.