FOUNDATIONS
This field studies how societies manage limited resources to meet unlimited wants.
What is Economics?
This concept means there are not enough resources to meet everyone’s wants.
What is scarcity?
This point occurs when quantity supplied equals quantity demanded.
What is equilibrium?
This measures how responsive demand or supply is to price changes.
What is elasticity?
This acronym stands for Gross Domestic Product.
What is GDP?
These are three main goals of macroeconomics: economic growth, full employment, and this.
What is price stability?
This curve shows the maximum output combinations possible given resources and technology.
What is the production possibilities frontier (PPF)?
This happens when the price is above equilibrium, meaning more is supplied than demanded.
What is a surplus?
This type of elasticity measures how demand changes when income changes.
What is income elasticity of demand?
This formula measures GDP by spending: C + I + G + (X − M).
What is the expenditure approach?
This branch of economics focuses on individual markets, firms, and households.
What is Microeconomics?
This term refers to the next-best alternative you give up when making a choice.
What is opportunity cost?
This law states that as price rises, quantity supplied also rises.
What is the law of supply?
This formula measures price elasticity of demand.
What is (% change in quantity demanded) / (% change in price)?
This type of GDP removes the effects of inflation.
What is real GDP?
This type of statement contains value judgments and cannot be tested.
What is a normative statement?
This principle states that as more of one input is added, additional output eventually decreases.
What are diminishing marginal returns?
This global process increases interconnectedness through trade, technology, and investment.
What is globalization?
If two goods have positive cross elasticity, they are this type of goods.
What are substitutes?
Counting goods more than once in GDP is called this.
What is double counting?
These are three reasons to study economics: analytical skills, insight into decisions, and diverse career opportunities.
What are the benefits of studying economics?
This ability to produce goods at a lower opportunity cost explains trade benefits.
What is comparative advantage?
These are three ways societies can organize economically: traditional, command, and this.
What is a market economy?
Governments use this economic concept to predict the effects of taxes, subsidies, or policies on markets.
What are models?
This measure reflects total goods and services produced within a country’s borders in a year.
What is GDP?