Economics : Comp Extra Credit Sheet

Efficiency

A point on the Production Possibilities Curve (PPC) indicating optimal resource use.

Inefficiency

A point inside the Production Possibilities Curve (PPC), representing suboptimal resource use.

Economic Growth

Requires the expansion of the Production Possibilities Curve (PPC).

Physical Capital

The tools and machinery that allow businesses to produce more output.

Human Capital

The skills, knowledge, and education of workers that make them more productive.

Private Goods

Goods that are rival and excludable.

Public Goods

Goods that are non-rival and non-excludable, often provided by the government.

Progressive Tax

A tax that takes a larger percentage from higher-income individuals than from lower-income ones.

Regressive Tax

A tax that takes a larger percentage from lower-income individuals than from higher-income ones.

Law of Demand

Demonstrates a negative relationship between price and quantity demanded.

Quantity Demanded

The amount of a good demanded at a specific price.

Price Ceiling

A cap on market prices that can affect seller pricing only if it is below equilibrium.

Minimum Wage

A legally mandated lowest hourly wage that can lead to market disequilibrium.

Explicit Costs

Out-of-pocket costs incurred during production.

Implicit Costs

Opportunity costs that represent income or benefits forgone.

Perfectly Competitive Firms

Firms that achieve both allocative and productive efficiencies in the long run.

Monopoly

A market structure where a single firm controls an entire market with no close substitutes.

Monopolistic Competition

A market structure with many firms competing with slightly different products.

Cartel

A colluding oligopoly where firms work together to limit production and raise prices.

Antitrust Policies

Regulations designed to promote competition and prevent monopolies.

GDP

Measures the total value of goods and services produced in a country.

Unemployment Rate

The percentage of the labor force that is unemployed, excluding discouraged workers.

Full Employment

A state where there is no cyclical unemployment, but frictional and structural unemployment still exist.

Unexpected Inflation

Inflation that benefits borrowers as it reduces the value of money owed.

Aggregate Demand

The total demand for goods and services in an economy.

Negative Supply Shock

A decrease in supply that raises prices and lowers real GDP.

Government Spending Multiplier Effect

Government spending leads to an increase in GDP greater than the initial spending amount.

Budget Deficit

The annual gap between government spending and tax revenue.

Monetary Policy

The process by which the Federal Reserve controls the money supply.

Comparative Advantage

The ability of a country to produce goods at a lower opportunity cost than another.

Currency Appreciation

An increase in currency value that results in decreased net exports.