Chapter 1 - Introduction: What is Economics?

Ceteris Paribus

________ is the Latin expression meaning that other variables are held fixed.

Scottish philosopher

________ Adam Smith (1723- 1790), who is also considered the founder of economics, wrote that he discovered within humankind that self- interest is more powerful than kindness or altruism.

Scarcity

________ is the resources we use to produce goods and services are limited.

Production inputs

(________ or resources) are used by people to produce goods and services.

Labor

________: the physical and mental effort people use to produce goods or services.

Managers

________ use economic analysis to decide how to produce goods and services, how much to produce, and how much to charge for them.

Economic analysis

________ often involves variables and how they affect one another.

origin

The ________ is the intersection of the two axes, where the values of both variables are zero.

Entrepreneurship

________: the effort used to coordinate the factors of production /to produce and sell products.

positive analyses

Economists contribute to policy debates by conducting ________ of the consequences of alternative actions.

societys problems

It provides a framework in which we are able to diagnose ________ and helps create possible solutions.

Microeconomics

________ is the study of the choices made by households (an individual or a group of people living together), firms, and government and how these choices affect the markets for goods and services.

Macroeconomics

________ is the study of the nations economy as a whole; it focuses on the issues of inflation (a general rise in prices), unemployment, and economic growth.

Marginal change

________ is a small, one- unit change in value.

Economic growth

________ occurs when a country expands its production facilities (machinery and factories), improves its public infrastructure (highways and water systems), widens educational opportunities, and adopts new technology.

Human Capital

________: the knowledge and skills acquired by a worker through education and experience.

Natural Resources

________: provided by nature.

Economics studies the choices we

________ make when there is scarcity; it is all about trade- offs.

negative relationship

A(n) ________ is between two variables if they move in opposite directions.

positive relationship

A(n) ________ is between two variables if they move in the same direction.

Economic analysis

________ provides important insights into real- world problems.

Positive Analysis

________ predicts the consequences of alternative actions by answering "What is ?.

Seignorage

_______________: Revenue raised from money creation

Government deficit

___________________ = new borrowing from the public + new money created

Monetarists

_____________________: Economists who emphasize the role that the supply of money plays in determining nominal income and inflation.