Chapter 2 (macro)

Economists

Professionals who study economic systems, analyze data, and provide explanations for economic phenomena.

Economic Variable

Any economic measure that can vary over a range of values, such as vehicle miles traveled or price of gasoline.

Correlation

When two variables tend to move up or down together; can be positive or negative.

Causation

When one event brings about another event, as opposed to mere correlation.

Controlled Experiments

Empirical tests of theories in a controlled setting to isolate specific effects.

Microeconomics

The branch of economics that focuses on individual firms and households, and their interactions in specific markets.

Macroeconomics

The branch of economics that examines the overall functioning and problems of the economy as a whole.

Ceteris Paribus

A Latin phrase meaning 'all other things being equal,' used in economic modeling to isolate the effect of one variable.

Positive Economics

Economic analysis that explains what happens in the economy without making policy recommendations.

Normative Economics

Economic analysis aimed at developing and recommending policies about what the government should do.

Economic Model

An explanation of how the economy or part of it works, often simplifying reality to focus on specific elements.

Correlation versus Causation

Correlation means events occur together, while causation indicates one event causes another; correlation does not imply causation.

Experimental Economics

A field of economics that uses controlled laboratory experiments to study economic behavior.