Macroeconomics AP // Макроикономика

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58 Terms

1

Economy

A system that coordinates choices about production with choices about consumption and distributes goods and services to the people who want them

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2

Market economy

In which production and consumption are the result of decentralized decisions by many firms and individuals

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3

Command economy

In which industry is publicly owned and there is a central authority making production and consumption decisions

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4

Mixed Economy

An economic system combining private and public enterprise; capital is publicly owned, government oversees the economy

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5

Capitalism

An economic system based on private ownership of capital; markets and prices determine the economy

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6

Incentives

Rewards or punishments that motivate particular choices

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7

Surplus

The amount of a product or service beyond what is required, above equilibrium prices

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8

Property rights

Establish ownership and grant individuals the right to trade goods and services with each other, create many of the incentives in market economies

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9

Marginal analysis

Analysis that involves comparing the marginal benefits and marginal costs

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10

Resource

Anything (land, labor, capital, entrepreneurship) that can be used to produce something else; aka economic resources

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11

Land resource

Resources found on the Earth (i.e. water, timber, minerals, etc.)

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12

Labor resource

The time and effort of workers in the production process

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13

Capital resource

Manufactured goods used to make other goods and services (i.e. machinery, buildings, tools, etc.)

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14

Entrepreneurship resource

Risk taking, innovation, and the organization of resources for production

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15

Resource scarcity

When there is not a great enough quantity of a resource to satisfy the various ways a society wants to use it; or for a limited supply of a resource, there is unlimited demand

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16

Opportunity cost

The value of the next best alternative that you must give up when you make a particular choice

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17

Microeconomics

Choices made by individuals, household, or firms - the small parts that make up the economy as a whole

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18

Macroeconomics

The overall ups and downs of the economy, the explanations behind those fluctuations and how economic policy minimizes damage they cause

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19

Economic aggregates

Economic measures such as the unemployment rate, the inflation rate, and gross domestic product, summarize data across many different markets

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20

Positive economics

The branch of economic analysis that describes the way the economy actually works, "right" or "wrong" answer question

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21

Normative economics

The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics

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22

Reasons why economists disagree

  1. Different core values held by economists 2. Different ways economic analysis is conducted (leading to different conclusions)

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23

Market Equilibrium

A situation where no one would be better off doing something different; or the supply is equal to the demand

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24

Business cycle

The alternation between economic downturns and upturns in the macroeconomy

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25

Recession

Occasional economic downturns in the business cycle, output and employment fall

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26

Expansions

AKA recoveries, periods in which output and employment are rising, economic upturns in the business cycle

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27

Depression

A very deep and prolonged economic downturn

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28

Employment

Total number of people who are currently working for pay; employment rates are ideally at 95% (full employment)

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29

Unemployment

Total number of people who aren't currently employed but are actively seeking out a job; ideally unemployment rates are at 5%

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30

Unemployment Rate

The percentage of the labor force (sum of unemployed and employed individuals) that are unemployed

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31

Output

The quantity of goods and services produced

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32

Aggregate Output

The economy's total production of goods, services within a time period (usually 1 year)

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33

Inflation

Rise in general level of prices

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34

Deflation

Fall in overall price level

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35

Economic Growth

An increase in the maximum possible output of an economy (working at max efficiency)

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36

Economic Models

Simplified version of reality used to better understand real-life situations in economics, not an actual economy, can be a graph, equation, simulation

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37

Other Things Equal Assumption

Aka ceteris paribus, the assumption that factors other than those being considered do not change

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38

Trade-off

When you give something up in order to obtain something else

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39

Production Possibilities Curve (PPC)

A graph used by economists to understand trade-offs in a simplified economy that produces two goods, shows the combinations of two goods and services; maximum quantities of each good for every quantity produced of the other

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40

Efficient

Best possible economy with no missed opportunities or making people worse off for others to be better, using all resources

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41

Productive efficiency

When an economy is producing at a point on its PPC, using all economic resources

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42

Allocative efficiency

When an economy allocates its resources so that consumers are as well off as possible

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43

Trade

When people divide tasks among themselves and each person provides a good or service that other people want in return for different goods and services that he or she wants; getting what you want in exchange for what you produce best

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44

Benefits of Trade

By dividing the tasks and trading with each other, two people can get more of they want than they could get by depending only on themselves

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45

Specialization

When each person engages in a task that he or she is particularly good at performing

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46

Comparative Advantage

Producing something if the opportunity cost of that production is lower for that individual than for other people (you lose less than others)

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47

Terms of Trade

The rate at which one good can be exchanged for another

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48

Absolute Advantage

When a person produces a good or service and can make more of it with a given amount of time and resources (you're more efficient than others)

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49

Market

A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade

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50

Demand

How much consumers are willing to buy of something

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51

Determinants of Demand

Factors other than price that motivate a consumer to purchase an item (individual tastes, preferences, wages, INEPT)

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52

Law of Demand

The claim that, other things being equal, the quantity demanded of a good (demand) falls when the price of the good rises

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53

Supply

Amount of a product offered for sale at all possible prices

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54

Law of Supply

Tendency of suppliers to offer more of a good at a higher price, less of it as prices fall

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55

Determinants of Supply

Factors other than supply that determine the quantities supplied (i.e. prices of resources and input, technology, tariffs or sanctions, PWIGNET)

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56

Movement Along the Demand Curve

The change in quantity demanded at a given price, affected by a change in the price (think up, down the demand curve, different from a shift of the curve)

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57

Shift of the Demand Curve

A change in the prices consumers are willing to pay (different from change in quantity demanded) affected by changes in income, preferences, consumer numbers, etc.

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58

Movement Along the Supply Curve

A change in the quantity producers are willing to sell, affected by a change

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