Ecn 101 Notes Review

These flashcards cover key economic concepts from the lecture notes in preparation for the exam.

Opportunity Cost

The value of the next best alternative forgone when making a choice.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others.

Gross Domestic Product (GDP)

The total monetary value of all final goods and services produced within a country's borders in a given year.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Marginal Propensity to Consume (MPC)

The increase in consumer spending that occurs with an increase in disposable income.

Aggregate Demand (AD)

The total demand for all goods and services within an economy at a particular price level in a given time period.

Aggregate Supply (AS)

The total supply of goods and services that firms in an economy plan to sell during a specific time period.

Price Ceiling

A maximum price set by the government for a particular good or service, above which it cannot rise.

Price Floor

A minimum price set by the government for a good or service, below which it cannot fall.

Fiscal Policy

The use of government spending and taxation to influence the economy.

Monetary Policy

The process by which the central bank controls the money supply to achieve specific goals such as controlling inflation, consumption, growth, and liquidity.

Recession

A significant decline in economic activity across the economy lasting longer than a few months.

Unemployment

The situation when people who are willing to work at prevailing wage rates cannot find suitable employment.

Labor Force

The total number of people employed and unemployed that are actively seeking work.

Sticky Wages

Wages that do not adjust quickly to changes in labor market conditions.

Subsidy

A financial assistance granted by the government to promote economic and social policy.

Supply and Demand

The relationship between the availability of a good or service and the desire for that good or service.