Unit I

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Economics

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AP Macroeconomics unit 1 flashcards

50 Terms

1

Economics

The social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited economic wants / Scarcity

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2

Microeconomics

The part of economics concerned with such individual units / Ex: The sand, water, fish, etc

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3

Macroeconomics

The part of economics concerned with the economy as a whole / Ex: The beach

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4

Economic Resources

Land, Labor, Capital, Entrep.

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5

Capital

Tools, Equipment used to make the product. Ex: Building, factory

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6

Land

Resources Ex: Tree

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7

Labor

Ex: Lumber Jack

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8

Entrep.

Store Ex: Staples / Office Depot

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9

Full Employment

The use of all available resources to produce want-satisfying goods and services. On the PPC

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10

Allocative Efficiency

On the Curve

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11

PPC

Graph with supply and demand (Be able to draw and label graph correctly)

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12

Market System (Capitalism)

Invisible Hand

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13

Circular Flow Model

Model / Drawing - See Power Point / Be able to draw and label correctly

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14

Full Production

Employment of available resources so that the maximum amount of goods and services is produced / On the PPC

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15

PPF

Chart / Table

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16

Economic Growth

Outward shift on the PPC due to resources or technology

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17

Command System

Communism

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18

Factors of Production

Land, labor, capital, entrep.

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19

Productive Efficiency

The production of a good in the least costly way

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20

Opportunity Cost

Next best thing / Sacrifice one good to get more of another / What you lose

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21

Economic System

A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem

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22

Product Market

A market in which products are sold by firms and bought by households

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23

Medium of Exchange

Any item sellers generally accept and buyers generally use to pay for a good or service / Ex: Money

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24

3 Fundamental Questions

1) What to produce 2) How to Produce it 3) For whom to produce it for

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25

Invisible Hand

Consumers / Adam Smith / Circular Flow Model

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26

Durable Goods

Last longer than 3 years / Ex: Car

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27

Nondurable Goods

Last less than 3 years / Ex: Bread

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28

Property Taxes

A tax on the value of property

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29

Monopoly

A single supplier or seller with no competition (Ex: Electric = Comed)

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30

Sales Tax

A tax levied on the cost of an item

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31

Free-Rider Program

Free to all / Ex: Parks

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32

Services

Ex: Oil Change

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33

Payroll Taxes

Tax taken out of your paycheck

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34

Coarse Theorem

The idea that spillover problems may be resolved through private negotiations of the affected parties

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35

Utility

The satisfaction of buying something

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36

Demand Schedule

Table that shows the quantity demanded of a good at a set price (Chart/Table)

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37

Law of Demand

Change in price results in a change in quantity demand - inverse (movement along the curve)

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38

Demand Curve

Be able to draw and label graph correctly

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39

Determinants of Demand

TRIBE

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40

Supply Schedule

Quantity of a good at a set price (Chart/Table)

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41

Law of Supply

Change in price results in a change in quantity supply - positive (movement along the curve)

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42

Supply Curve

Graph

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43

Determinants of Supply

ROTTEN

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44

Surplus

Too much

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45

Shortage

Too little

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46

Equilibrium Price

The price at which demand and supply intersect

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47

Equilibrium Quantity

Quantity demand meets quantity supply (=)

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48

Ceteris Paribus

Other things equal - limit the influence of other factors when making a generalization

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49

Comparative Advantage

The producer with the lowest opportunity cost /
Same as Opportunity Cost

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50

Absolute Advantage

The producer that can produce the most output OR requires the least amount of inputs

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