AP Macroeconomics Vocabulary

Flashcards covering key foundational terms and concepts from AP Macroeconomics.

How is economics defined?

The social science of how individuals, institutions, and society make optimal choices under conditions of scarcity.

What does microeconomics focus on?

Decision-making by individual consumers, workers, households, and business firms.

What does macroeconomics examine?

The economy as a whole, or its aggregates (government, households, business).

What is an aggregate in economic terms?

A collection of specific economic units treated as if they were one unit.

What is the meaning of the Latin phrase "ceteris paribus"?

All other things held constant or equal.

What is positive economics?

An area of economics that focuses on facts and cause-and-effect relationships ("what is") while avoiding value judgments.

What is normative economics?

An area of economics that incorporates value judgments about what the economy should be ("what ought to be").

How is utility defined?

Pleasure or satisfaction obtained from consuming a good or service.

What is the paradox of value?

An emphasis on wants over needs (for example, diamonds vs. water).

What is rational behavior in economics?

Doing what is in your own best self-interest.

What are consumer goods?

Products and services that satisfy human wants directly.

What are capital goods?

Human-made resources used to produce goods.

What is marginal analysis?

Comparing marginal benefits and marginal costs.

What is scarcity?

Limited goods and services.

What are trade-offs?

Alternatives that must be given up when one choice is made rather than another.

What are the four factors of production?

Land, labor, capital goods, and entrepreneurship.

What are examples of needs listed in the study material?

Food, shelter, clothing.

Who are consumers?

People who purchase goods and services.

How are services defined?

Actions or activities performed for a fee.

Who are producers?

People who supply goods and services.