Economics – 1st Monthly Exam Reviewer (Lessons 1.1 – 2.2)

A set of 30 vocabulary flashcards covering key economic terms, thinkers, and concepts from the lecture notes to aid exam preparation.

Economics

A social science that studies how people decide to use limited resources to satisfy unlimited wants and needs.

Oikonomiya

Greek root of the word economics, combining ‘oikos’ (house) and ‘nomos’ (management); literally, household management.

Economic Goods

Items that have a price because they are limited in supply, e.g., water, food, clothing.

Free Goods

Resources available without cost, usually abundant in nature, such as sunlight and air.

Budgeting

Prioritizing spending by separating needs from wants to manage limited money effectively.

Adam Smith

Known as the Father of Modern Economics; championed free-market capitalism and laissez-faire policies.

Laissez-faire

Economic principle meaning “let alone,” advocating minimal government intervention in markets.

Capitalism

An economic system in which private individuals own businesses and compete freely for profit.

Thomas Robert Malthus

Economist who warned that unchecked population growth outpaces food supply, risking famine and poverty.

Malthusian Theory

Idea that population grows geometrically while food supply grows arithmetically, leading to inevitable shortages.

David Ricardo

Economist who developed the Laws of Diminishing Marginal Returns and Comparative Advantage.

Law of Diminishing Marginal Returns

Principle stating that adding more inputs to a fixed resource eventually yields smaller increases in output.

Law of Comparative Advantage

Theory that a country should specialize in goods it can produce most efficiently and trade for others.

John Maynard Keynes

Father of Modern Employment Theory; advocated government spending to revive economies during recessions.

Keynesian Economics

Economic framework asserting that active government intervention can stabilize output and employment.

Karl Marx

Author of Das Kapital and Father of Communism; criticized capitalist exploitation of workers.

Das Kapital

Marx’s major work analyzing how capitalism functions and why he considered it unjust.

Communism

System envisioned by Marx in which property is communally owned and class distinctions disappear.

Scarcity

Permanent condition where resources are limited relative to human wants.

Shortage

Temporary situation in which demand exceeds current supply, often fixable by production adjustments.

Opportunity Cost

The value of the best alternative sacrificed when a choice is made.

Trade-off

Accepting less of one thing to gain more of another when resources are limited.

Incentives

Rewards or penalties that influence people’s decisions and actions.

Human Capital

Skills, knowledge, and experiences acquired by individuals that increase their economic value.

Scientific Method

Systematic process of identifying a problem, forming a hypothesis, gathering data, analyzing results, and drawing conclusions.

Hypothesis

An educated guess or proposed explanation tested through study and experimentation.

Null Hypothesis (H₀)

Prediction that there is no effect or relationship between variables being studied.

Alternative Hypothesis (H₁)

Prediction that there is an effect or relationship between variables being studied.

Individual Choice

Decision made by a single person regarding the allocation of their own resources.

Social Choice

Collective decision made by a group or community affecting shared resources or outcomes.