Introduction to Economics: Scarcity, Allocation, and the Business Cycle

A set of vocabulary flashcards covering core economics concepts mentioned in the notes, including scarcity, distribution, GDP, inflation, and the business cycle.

Economics

The study of how to allocate scarce resources to satisfy wants, focusing on efficiency, allocation over time, and distribution.

Scarcity

The fundamental problem that resources are limited while wants are unlimited, requiring choices about what to produce and consume.

Allocation

How limited resources are distributed among people and uses, including who gets what and when.

Efficiency

Using resources in a way that maximizes well-being given scarcity.

Scarce resources

Inputs like land, labor, and capital that are limited relative to wants.

Economy

The system of producing, distributing, and consuming goods and services using scarce resources.

Market mechanisms

Processes (often via prices) by which markets allocate scarce resources.

Prices

Signals in markets that help determine who gets a good and how much is produced.

GDP (Gross Domestic Product)

The total value of all final goods and services produced in an economy over a period.

Real GDP

GDP adjusted for inflation to reflect true growth in output.

Nominal GDP

GDP measured at current prices, not adjusted for inflation.

Inflation

A general rise in the price level, affecting purchasing power and the value of money.

Unemployment rate

The share of the labor force that is unemployed and actively seeking work.

Business cycle

Short-term fluctuations in economic activity around a long-run growth trend, including expansions and contractions.

Expansion

A period when the economy grows and output increases.

Contraction

A period when the economy slows down and output decreases.

Recession

A significant decline in economic activity lasting for a period of time, often identified by widespread downturns.

Growth trend

The long-run upward trajectory of the economy’s output, representing sustained growth.

Fiscal policy

Government decisions about taxation and spending to influence economic activity.

Monetary policy

Central bank actions (e.g., by the Federal Reserve) to manage money supply and interest rates to influence the economy.