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circular flow diagram
views economy as consisting of households and firms interacting in a goods and services marketing and labor market
command economy
economy system where economic decisions are ppassed down from gov authority and where the gov owns the resources
division of labor
different workers are assigned to different tasks that they specialize the most in to increase efficiency
different workers are divided to perform required tasks to produce a good or service
economics
how humans make choices under conditions of scarcity
economies of scale
when the average cost of producing each individual unit declines as total output increases
exports
products (goods and services) made domestically and sold abroad
fiscal policy
econ policies involving gov spending and taxes
globalization
trend in which buying and selling in markets have increasingly crossed national borders
goods and services market
market where firms are sellers of what they produce and households are buyers
Gross Domestic Product (GDP)
measure of size of total production in an economy
imports
products (goods and services) made abroad and then sold domestically
labor market
market where households sell their labor as workers to business firms or other employers
macroeconomics
the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance
market
interaction between potential buyers and sellers; combination of supply and demand
market economy
economy where economic decisions are decentralized, private individuals own resources and businesses supply goods and services based on demand
microeconomics
branch focusing on actions of particular agents within the economy i.e. households, workers, and business firms
monetary policy
policy that involves altering level of interest rates, availability of credit in economy and extent of borrowing
private enterprise
system where private individuals or groups of private individuals own and operate means of production (resources and businesses)
scarcity
when human wants for goods and services exceed available supply
specialization
when workers/firms focus on certain tasks that they are well-suited for during production process to maximize efficiency
theory
a representation of an object or situation that is simplified while including enough of the key features to help us understand the object or situation
traditional economy
typically an agricultural economy where things are done the same as they have always been done
underground economy
a marketing where buyers and sellers make transactions in violation of one or more