module one
the way the economy works
positive economics
a very deep and prolonged downturn in the business cycle
depression
what is opportunity cost?
opportunity lost, what you give up to get something in return
this is when the cost of producing the good is lower for that individual than for other people
comparative advantage
the phrase “gains from trade” refers to the:
increase in total output that is realized when individuals specialize in particular tasks and trade with each other
the way the economy should work
normative economics
periods of economic downturns when output and employment are falling
recession
what are tradeoffs?
when you give up something to have something else
all points on the production possibility curve represent:
efficient production points
individuals gain from trade because:
of specialization in production.
the study of how individuals, households, and firms make decisions and how those decisions interact
microeconomics
recoveries, periods of economic upturns when output and employment are rising
expansions
what is the production possibilities curve?
graph showing maximum production
economists say an economy is efficient when...
opportunities to make some people better off without making other people worse off have been taken
As long as people have different ________, everyone has a comparative advantage in something.
opportunity costs
is concerned with the overall ups and downs of the economy
macroeconomics
the alternation between economic downturns, known as recessions and economic upturns known as expansions
business cycle
what is scarcity?
refers to the basic economic problem, the gap between limited and what is limitless
if the opportunity costs of production are constant, then the production possibility curve is:
a straight line
goods and services purchased from abroad are ________, while goods and services sold abroad are ________.
imports; exports
are economic measures that summarize data across many different markets
economic aggregates
what is the goal of macroeconomic policies?
to maximize the level of national and provide economic growth
four types of economic systems?
traditional, command, market, mixed
an individual had this if a activity they can do is better than other people
absolute advantage
5 factors that affect shift in supply
1) changes in input
2)changes in the price of related goods and services
3)changes in technology
4)changes in expectations
5)changes in the number of producers