Macro Economics: Production Possibilities Frontier and Growth (Vocabulary)

Vocabulary flashcards covering key terms from the lecture notes on production possibilities, growth, and related economic concepts.

Production Possibilities Frontier (PPF)

A curve showing all attainable and efficient combinations of two goods that an economy can produce with its given resources and technology.

Attainable

A production point that can be reached with the available resources and technology.

Efficient

A point on the PPF where all resources are fully utilized to maximize output.

Inefficient

A point inside the PPF; attainable but not maximizing output because resources aren’t fully used.

Unattainable

A point outside the PPF; not possible to produce with the current resources and technology.

Economic Growth

An outward shift of the PPF, meaning more of at least one good can be produced due to more resources, better technology, or more efficient use of resources.

Technology

Know-how and innovations that improve the efficiency of production, shifting the PPF outward.

Resources

Inputs used to produce goods and services, including labor and capital.

Labor (L)

Human effort used in production.

Capital (K)

Physical assets like machines and buildings used to produce goods.

Total Factor Productivity (TFP)

Overall efficiency with which inputs (labor and capital) are transformed into output; reflects technology level.

Consumer Goods

Goods purchased for immediate consumption (e.g., food, clothing, entertainment).

Capital Goods

Goods used to produce other goods and services (e.g., factories, equipment).

No Free Lunch

There is a cost to growth or any choice; increasing one thing often requires sacrificing another (opportunity cost).

Fracking

A method to extract oil from shale by fracturing rock, enabling access to more oil and reducing production costs.

Immigration (labor supply)

Policy and flow affecting the size of the labor force; economists argue efficient immigration can support longer-term growth.