Comparative Advantage
The ability to produce a good at a lower opportunity cost than another producer
What is comparative advantage?
The price at which the quantity demanded equals the quantity supplied
What is the equilibrium price?
In the circular flow model, households sell their resources in this market
What is the factor market?
GDP evaluated at current market prices, unadjusted for inflation
What is nominal GDP?
The phase of the business cycle characterized by increasing real GDP and falling unemployment
What is an expansion?
The ability to produce more of a good than another producer using the same amount of resources
What is absolute advantage?
A situation in which quantity supplied is greater than quantity demanded
What is a surplus?
In the circular flow model, firms sell their finished products in this market
What is the product market?
GDP calculated using the prices of a selected base year, adjusted for inflation
What is real GDP?
The lowest point of a business cycle, marking the end of a recession
What is a trough?
The terms of this must fall between the opportunity costs of both producers for it to be mutually beneficial
What is trade?
When demand increases and supply remains constant, the equilibrium price and quantity will do this
What is increase?
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A broader price index that measures the prices of all goods and services included in gross domestic product
What is the GDP deflator?
A period of decline in total output, income, employment, and trade, usually lasting six months or more
What is a recession?
If Country A has a comparative advantage in wheat and Country B has a comparative advantage in cloth, Country A should do this with wheat
What is export it?
When supply decreases and demand increases, the equilibrium price will do this
What is increase?
The payment to the factor of production known as capital
What is interest?
The nominal interest rate minus the expected rate of inflation
What is the real interest rate?
The peak of the business cycle is immediately followed by this phase
What is a contraction?
What is the average wing speed velocity of an swallow carrying a coconut?
Is it an African or European swallow?
When both supply and demand increase simultaneously, the effect on equilibrium price is this
What is indeterminate?
The payment to the factor of production known as entrepreneurship
What is profit?
If nominal GDP increases by 5% and the price level increases by 3%, real GDP changes by this approximate percentage
What is an increase of 2%?
The level of real GDP that an economy would produce if it were at the natural rate of unemployment
What is full employment output?