Definitions

What are the main components of capitalism as an economic system?

Private property, markets, and firms.

What are some costs associated with the capitalist revolution?

Growing environmental threats and global economic inequalities.

What does GDP per capita approximate?

The average annual income of 1 individual.

How does a higher GDP per capita affect quality of life?

A higher GDP per capita typically indicates a better quality of life.

What is disposable income?

The amount of money a person has left to spend or save after taxes have been deducted from their income.

What did the Industrial Revolution signify?

A wave of technological advances transitioning from an agrarian economy to a commercial and industrial economy starting in Britain in the 18th century.

What is an economic system?

A way of organizing the economy.

Define institutions in economics.

Laws and informal rules regulating social interactions, also known as the rules of the game.

What is the definition of a firm?

One or more individuals own capital goods used for production.

What is absolute advantage?

Having lower input costs in the production of a good compared to another person or country.

What is comparative advantage?

Having a lower opportunity cost in the production of a good relative to another person or country.

What does the term aggregate economy refer to?

The total or overall economy, focusing on big-picture economic indicators.

What is correlation?

A relationship or connection between two things that change together, but does not imply causation.

What is causation?

When one event directly causes another event to happen.

What is the role of markets in an economy?

To transfer goods and services from one person to another.

What does GDP stand for and what does it represent?

Gross Domestic Product; it is the total value of all goods and services produced in a country over a specific period.

What is the cumulative effect?

The combined impact of actions that build up over time.

What does the multiplier model explain?

How an initial change in spending can lead to a larger overall change in national income or output.

What is the Better Life Index?

A tool that helps countries measure and improve well-being according to what people value.

What does participation rate measure?

Who is in the labor force.

What is the unemployment rate?

The percentage of the labor force that is looking for a job but does not currently have one.

What does the employment rate indicate?

The proportion of the working-age population that has a job.