Economics Definitions

These flashcards cover key economic terms and definitions highlighted in the lecture notes.

Opportunity cost

Value of the best alternative that is forgone when a choice is made.

Infant industry

An industry in its early stages of development.

Cyclical unemployment

Unemployment that arises due to the drop in aggregate demand.

Frictional unemployment

Unemployment that arises during the transition period between jobs.

Structural unemployment

Unemployment that arises when someone's skills, experience, education, or location do not meet employers' needs.

GDP (Gross Domestic Product)

The total value of final goods and services newly produced in a country over a period of time.

BEA (Bureau of Economic Analysis)

The agency in the US in charge of compiling and publishing the national accounts.

Underemployment

Working fewer hours than desired and/or in a job that does not utilize one's skills.

Sticky Wage Theory

Psychological resistance, minimum wage, and long-term contracts cause wages to stay about equilibrium levels.

Effective wage theory

Employers may prefer higher wages to increase motivation.

Washington Consensus

A set of economic policy reforms in the 1990s centered on fiscal discipline, market liberalization and privatization, trade liberalization, and openness to foreign investment.

Externalities

Side effects or unintended consequences that may be positive or negative and may impact a person or entities.

Recession

A drop in aggregate demand for two consecutive calendar quarters.

Public goods

A good that does not diminish after the use of one individual, and cannot be excluded from anyone.