Macroeconomics Ch 1. Vocabulary
Macroeconomics Ch 1. Vocabulary ECON 2010
University of Memphis
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This 2 page Class Notes was uploaded by Anthony Moss on Thursday February 4, 2016. The Class Notes belongs to ECON 2010 at University of Memphis taught by Professor Ayangbayi in Spring 2016. Since its upload, it has received 89 views. For similar materials see Intro To Macroeconomics in Economcs at University of Memphis.
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Date Created: 02/04/16
Ch 1. Vocabulary Scarcity - Asituation in which unlimited wants exceed the limited resources available to fulfill those wants. Economics – The study of the choices people make to attain their goals, given their scarce resources. Economic Model – Asimplified version of reality used to analyze real-world economic situations. Market –Agroup of buyers and sellers of a good or services and the institution or arrangement by which they come together to trade. MarginalAnalysis – Analysis that involves comparing marginal benefits and marginal costs. Trade-off – The idea that, because of scarcity, producing more of one good or service means producing less of another good service. Opportunity cost – The highest-valued alternative that must be given up to engage in an activity. Centrally planned economy –An economy in which the government decides how economic resources will be allocated. Market economy –An economy in which the decisions of households and firms interacting in markets allocate economic resources. Mixed economy- An economy in which most economic decisions result from interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources. Productive efficiency –Asituation in which a good or service is produced at lowest possible cost. Allocative efficiency –Astate of the economy in which production is in accordance with consumer preferences; in particular. Every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it. Voluntary exchange- A situation that occurs in market when both the buyer and the seller of a product are made better off by the transaction. Equity - The fair distribution of economic benefits. Economic variable- Something measurable that can have different values, such as the income of doctors. PositiveAnalysis – Analysis concerned with what is. Normative analysis –Analysis concerned with what ought to be. Microeconomics – The study of how households and firms make choices, how they interact in makets, and how the government attempts to influence their choices. Macroeconomics – The study of the economy as a whole,including topics such as inflation unemployment, and economic growth.
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