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Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Total Utility

The total satisfaction received from consuming a good or service.

Marginal Utility

The additional satisfaction gained from consuming one more unit of a good or service.

Consumer Price Index (CPI)

A measure that examines the weighted average of prices of a basket of consumer goods and services.

Autarky

A situation in which a country does not trade with others and is self-sufficient.

Aggregate Demand

The total demand for goods and services within a particular market.

Cost-Push Inflation

Inflation that results from an increase in the prices of inputs, leading to a decrease in the supply of goods.

Negative Externalities

Costs that are suffered by a third party as a result of an economic transaction.

Expenditures Approach to GDP

A method for calculating GDP by adding up consumption, investment, government spending, and net exports.

Tax Multiplier

A ratio that shows how a change in taxes will affect overall economic activity.

Marginal Propensity to Consume

The fraction of additional income that is spent on consumption.

Macroeconomic Goals

Full employment, price stability, and economic growth.

Price Floors

A minimum price set by the government that can be charged for a good or service.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare.

Circular Flow Model

A model that shows how goods, services, and money flow through the economy between households and businesses.

Public Goods

Goods that are neither excludable nor rival in consumption.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Automatic Stabilizers

Economic policies and programs that automatically help stabilize an economy.

Open Market Operations

The buying and selling of government securities by the central bank to control the money supply.

Nominal GDP

The total value of all goods and services produced in a country at current market prices.

Liquidity

The availability of liquid assets to a market or company.

Gini Coefficient

A measure of income inequality within a population.

Okun's Law

An empirically observed relationship between unemployment and losses in a country's production.

Fiscal Policy

The use of government spending and revenue collection to influence the economy.

Demand Shift

A change in quantity demanded at every price, often due to factors other than the product's price.

RINTE Variables

Non-price determinants of demand that can shift the demand curve.

Economic Surplus

The difference between what consumers are willing to pay for a good or service versus what they actually pay.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to changes in price.

Sunk Costs

Costs that have already been incurred and cannot be recovered.

Substitutes

Products or services that can be used in place of each other.

Marginal Benefits

The additional benefit derived from consuming one more unit of a good or service.

Production Possibilities Curve

A graph that shows the maximum possible output combinations of two goods that can be produced given available resources.