Micro-Economics

Economic Policy

Strategies implemented by governments to influence their economies.

Monetary Policy

Actions by the Federal Reserve to control the money supply and interest rates.

Fiscal Policy

Government decisions regarding tax codes and budget allocations.

Inflation

A general increase in prices and fall in the purchasing value of money.

Recession

A period of reduced economic activity characterized by falling GDP and employment.

Soft Landing

A scenario where inflation is controlled without triggering a recession.

Federal Fund Rate

The baseline interest rate set by the Federal Reserve.

Economics

The study of human choice under conditions of scarcity.

Microeconomics

The study of individual consumers, households, and firms.

Macroeconomics

The study of the economy as a whole, including cities and nations.

Model

A simplified representation of a complex phenomenon.

Constrained Optimization

The process of making the best possible decision within limitations.

Representational Decisions

Choices about how to depict information or concepts.

Utility

The satisfaction or preference derived from consuming goods and services.

Producers

Entities that create goods or services to maximize profit.

Positive Economics

The analysis of economic phenomena based on factual statements.

Normative Economics

The study of how the economy should work based on value judgments.

Business Cycle

The fluctuations in economic activity over time, including expansions and recessions.

Employment

The total number of people currently working for pay.

Unemployment

The number of people actively seeking work but not currently employed.

GDP (Gross Domestic Product)

The total value of all goods and services produced in an economy.

Inflation Rate

The annual percentage change in the aggregate price level.

Production Possibility Curve (PPC)

A model illustrating trade-offs in production between two goods.

Trade-off

The concept of giving up one thing to gain another.

Allocative Efficiency

Producing at a level that maximizes consumer satisfaction.

Opportunity Cost

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

Sources of Economic Growth

Factors such as increased resources and technological advancements.

Comparative Advantage

The ability to produce a good at a lower opportunity cost than others.

Supply and Demand Model

A framework for understanding how prices are determined in a market.

Equilibrium

The point where quantity supplied equals quantity demanded in a market.

Surplus

A situation where quantity supplied exceeds quantity demanded.

Shortage

A situation where quantity demanded exceeds quantity supplied.

Price Ceiling

A government-imposed limit on how high a price can be charged.

Price Floor

A government-imposed limit on how low a price can be charged.

Black Market

An illegal market where goods and services are traded outside of government regulation.

Quota

A limit on the quantity of a good that can be bought or sold.

Deadweight Loss

The loss of economic efficiency when equilibrium is not achieved.

Market Economy

An economic system where decisions are made by individual producers and consumers.

Command Economy

An economic system where decisions are made by a centralized authority.

Incentives

Rewards or penalties that motivate specific economic behaviors.