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opportunity cost
value of the next better thing when a choice is made
mixed economy
the government and citizens make economic decisions
trade offs
all the other options and alternatives that you give up to choose an option
Business cycles
Expansion, recession, peak, trough, & depression
expansion
economy grows + expands
Recession
economy goes downhill
peak
highest point
trough
lowest point
depression
long recession
socialism
government owns industries but people can still have their own properties
hunger game
government controls everything
communism
the government owns all the property and resources but wealth is distributed equally
GDP
the value of all goods produced in a country in one year
Feasible point
inside or on curve (possible)
efficient points
on curve
impossible point
outside curve (not possible)
opportunity cost calculations
finding what you give up when you produce or already chose something else
opportunity cost calculations per unit
how much of one resource or good you give up to produce 1 unit of another good
4 factors of production
land: resources that are natural
labor: human work
capital: tools/machines
physical capital: equipment
human capital: education
entrepreneurship: business owners who take risks
inflation
increase in prices over time
core inflation
inflation that doesnt include food or energy
opportunity cost calculations per unit
the amount of one good that is sacrificed to get 1 unit each of another good
shifting ppc lines = factors that shift PPC
ppc shifts if resources or technology change
right shift: growth
left shift: decline
Comparative advantage calculation
who can produce a good at lower opportunity cost
PPI
price changes for goods at producer level
absolute advantage
produce good using same resources
law of demand
when prices go up, demands go down
capitalism
individuals and business are driven by their own profit and seek that
law of supply
prices go up and supply goes up
traditional economy
economy based on traditions and customs
GDP - 4 expenditure categories
C: consumer spending
I: investment
G: government spendign
X-M: exports-imports
market economy
individuals and businesses make decisions for the economy based off of supply and demand
CPI
change in prices that consumers pay for goods and services
redrawing PPC
the ppc graph adjusts to show growth, loss or specific something