Definitions

Capitalism as a new economic system: private property + markets + firms.

Costs of this capitalist revolution: growing environmental threats + global economic inequalities.

GDP per capita ≈ average annual income of 1 individual.

• Higher GDP-per-capita → better quality of life

Disposable income: is the amount of money a person has left to spend or save after taxes have been deducted from their income. It represents the money available for personal spending on needs (like food and housing) and wants (like entertainment or vacations).

Industrial Revolution: Wave of technological advances starting in Britain in 18th century,  From agrarian economy to a commercial and industrial economy.

Economic system: A way of organizing the economy

Institutions: Laws + informal rules regulating social interactions. Aka rules of the game.

Main economic institutions = private property, markets, and firms.

Firms: One or more individuals own capital goods used for production.

Absolute advantage: in the production of a good if the inputs it uses to produce this good are less than in some other person or country

Comparative advantage: in the production of a good, if the cost of producing that good relative to the cost of producing another good is lower than another person or country’s cost to produce the same two goods.

Aggregate economy: This term generally refers to the total or overall economy

Aggregate economy looks at big-picture economic indicators and behaviors, rather than focusing on individual markets or industries

Correlation refers to a relationship or connection between two things, where they appear to change together. When two variables are correlated, it means they tend to increase or decrease in similar patterns, but this doesn’t necessarily mean that one causes the other.

Causation means that one event is the result of the occurrence of another event; in other words, one thing directly causes the other to happen. If we say that "A causes B," we mean that changes in A bring about changes in B

Markets:  Way of transferring goods/services from one person to another

GDP, or Gross Domestic Product: is the total value of all goods and services produced in a country over a specific period, usually a year or a quarter.

The cumulative effect: refers to the combined impact of something that builds up over time, rather than happening all at once. When small actions, events, or changes accumulate, they can lead to a significant overall effect

The multiplier model: is an economic concept that explains how an initial change in spending (such as government spending or investment) can lead to a larger overall change in national income or output.

The Better Life Index: helps highlight what makes life fulfilling and helps countries measure and improve well-being in ways that reflect what people care about most

Participation Rate: Who’s in the labor force.

Unemployment Rate: Who in the labor force doesn’t have a job but is looking.

Employment Rate: Who in the working-age population has a job.