MacroEconomics Unit 1

Economics

The study of why people make choices when buying, selling, spending, and saving.

Goods

Things that can be seen and touched, such as sneakers, IPODs, and bicycles.

Services

Useful work that cannot be touched, exemplified by salespeople and bank tellers.

Economic Resources

Things that go into the making of goods and services.

Scarcity

A situation in which there is not enough of something to go around, such as food or water.

Economic Choices

Decisions made by people, businesses, and governments because of scarcity.

Purposeful Behavior

Behavior driven by rational self-interest, where people seek opportunities to increase satisfaction.

Costs and Benefits

The evaluation of whether the benefits of an action exceed its costs.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Trade-Offs

The process of weighing the costs and benefits of a decision.

Unintended Effects

Outcomes that differ from what was expected when an action is taken.

Rationing Device

A method used to determine who gets what portion of resources and goods.

Competition

The rivalry among sellers or buyers in the market, driven by scarcity.

Microeconomics

The study of economic forces that affect individual components of the economy.

Macroeconomics

The study of economic forces on the economy and society as a whole.

Economic Theory

A framework used by economists to understand behaviors and predict outcomes.

Theory vs. Hypothesis

A theory is not a hypothesis; it is a general principle that can predict outcomes.

Scientific Method

A systematic approach involving research, observation, and experimentation to build theories.