Economics Review Flashcards

Flashcards for reviewing key economic concepts

What is Economic Growth?

The sustained increase in productivity of an economy

What is Opportunity Cost?

The benefit forgone when choosing one alternative over another

What is Land?

Natural resources used in production

What is Capital?

Human-made resources used to create further goods and services

What is Labour?

Mental and physical human input in production

Who are Enterprise/Entrepreneurs?

People who initiate and manage combining land, labour, and capital for profit

What is a Market Economy?

An economy where people and businesses make decisions with little government involvement

What is a Mixed Economy?

A combination of market and command economies

What is a Command Economy?

An economy where the government makes all important economic decisions

What is a Traditional Economy?

An economy based on customs and traditions passed down for generations

What is Cyclical Unemployment?

Unemployment resulting from cycles of economic upturn and downturn

What is Structural Unemployment?

Unemployment caused by forces other than the business cycle, like changes in technology.

What is Frictional Unemployment?

Short-term unemployment when workers search for new jobs or transition between jobs

What characterizes the PEAK (boom) phase of an economic cycle?

Full employment and inflationary pressures due to high demand

What characterizes a CONTRACTION (downswing)?

Rising unemployment and declining inflationary pressure

What characterizes the TROUGH (recession) phase?

Lowest levels of income, output, and consumer demand

What characterizes a RECOVERY (upswing)?

Rising economic activity, income, and employment

What is a Technical Recession?

Two consecutive negative quarters of economic growth

There is what type of relationship between unemployment and inflation/GDP

There is a inverse relationship

Supply and demand

Prices are set by what, with little government involvement?

What is a Mixed Economy?

The government regulates things in this economy

What is a Command Economy?

The government makes decisions and owns most businesses in this economy

What is a Traditional Economy?

Goods and services are based on customs that have been passed down for generations in this Economy

What is Cyclical unemployment?

This type of unemployment rises during recessions of the economy

What is Structural Unemployment?

This type of unemployment requires radical change to redress the situation

What is Frictional unemployment?

Even when the economy is at full employment, this is still present

What is the Peak Phase?

In this phase, demand equals expidenture

What is a Contraction

Rising unemployment is characteristized in this

What is a Trough

The lowest level of income and output in the economy is this

What is Recovery?

Economy reaches full capacity and enters a boom phase