Vocab Vault
This fundamental concept describes the situation where resources are limited but human wants are infinite
scarcity
This law states that as the price of a good increases, the quantity _________ of that good decreases
law of demand
This method of calculating GDP adds up Consumption, Investment, Government spending, and Net Exports
expenditure approach
A country has this when it can produce a good at a lower opportunity cost than another country
What is comparative advantage?
What is the most widely used currency in international trade globally?
USD
This is defined as the value of the next best alternative that is given up when a choice is made
opportunity cost
This occurs when a transaction has a harmful side effect on a third party who was not involved in the deal
negative externality
This specific economic condition is defined as two consecutive quarters of negative economic growth
recession
This formula is calculated by dividing the percentage change in quantity demanded by the percentage change in price
PED
If you eat 10 cakes, the satisfaction you get from the 10th cake is usually less than the 9th. What is this law called?
law of diminishing marginal utility
These are the four inputs used to produce goods and services: land, labor, capital, and entrepreneurship
factors of production
A government-set maximum price placed below the equilibrium to help consumers afford essential goods
price ceiling
A sustained increase in the general price level of an economy
inflation
An increase in the value of a currency within a floating exchange rate system
appreciation
Which British economist famously argued that government deficit spending could help stabilize economies during recessions?
John meynard keynes
This term refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs
sustainability
To achieve this, a firm must produce at the output level where Marginal Revenue (MR) equals Marginal Cost (MC)
profit maximization
This type of policy is managed by a Central Bank and involves manipulating interest rates and the money supply
monetary policy
This value can be found using the formula 1 / (1 - MPC)
keynesian multiplier
What major infrastructure spending did Alphabet (Google) announce for 2026, funded partly by Japanese yen bonds?
AI infrastructure
This market failure occurs when individuals use a public good without paying for it because it is non-excludable
free rider problem
This occurs when it is more efficient for only one firm to exist in
natural monopoly
This mathematical ratio, ranging from 0 to 1, is used to measure income inequality within a nation
gini coefficent
This composite index measures development based on three dimensions: life expectancy, education, and GNI per capita
What is the Human Development Index (HDI)
Despite heavy U.S. tariffs, which country's trade surplus hit a record high of over $1 trillion in 2025?
China