Macroeconomics
Unlike microeconomics, which studies individual markets and firms, macroeconomics focuses on the performance and behavior of this.
What is the overall economy?
Points located directly on the PPF curve represent combinations of output that are both feasible and this.
What is efficent?
According to the Law of Supply, as price increases, this variable also increases, holding everything else constant.
What is quantity supplied?
The Law of Demand states that price and quantity demanded share this type of mathematical relationship.
What is an inverse (or negative) relationship?
GDP measures the total market value of all this type of goods and services produced within a country in a given year, excluding intermediate goods to avoid double counting.
What are final goods and services?
This key economic problem arises because human wants are virtually unlimited, but resources are limited.
What is scarcity?
A point located inside (below) the PPF curve indicates that economic resources are currently being used this way.
What is inefficiently?
The Supply curve slopes in this direction.
What is upward (or positive slope)?
Goods for which demand increases as consumer income rises are known as these types of goods.
What are normal goods?
Under the expenditure approach, GDP is calculated using the formula GDP = C + I + G + NX. The letter $I$ stands for this spending component
What is investment?
The next best alternative that is given up when making an economic decision.
What is opportunity cost?
Outward shifts of the PPF curve represent this long-run macroeconomic goal.
What is economic growth?
If the cost of raw materials needed to produce a good drops, the supply curve will shift in this direction.
What is to the right (or increases)?
If peanut butter and jelly are complements, a sharp price increase in peanut butter will cause the demand curve for jelly to shift in this direction.
What is to the left (or decreases)?
This measure of GDP is adjusted for inflation, making it better suited for comparing economic output across different years.
What is real GDP?
The model illustrating how money, inputs, and outputs flow between households and businesses through product and resource markets.
What is the Circular Flow Model?
When an economy uses all its available resources to produce the exact combination of goods and services most desired by society, it achieves this.
What is equilibrium?
When the price of corn rises, a farmer switches land away from wheat to grow corn instead, causing the supply curve for wheat to shift in this direction.
What is to the left (or decreases)?
Two goods are classified as these if an increase in the price of one leads to an increase in demand for the other.
What are substitute goods (or substitutes)?
Government payments made to individuals for which no current goods or services are rendered, such as Social Security or unemployment benefits, are excluded from GDP and called this.
What are transfer payments?
This type of economic analysis describes how the economy actually operates using testable claims, whereas normative economics involves value judgments about how it should work.
What is positive economics?
Even if country A can produce more of both goods than country B, country B will still have this type of advantage if it can produce a good at a lower opportunity cost.
What is comparative advantage?
Improvements in this variable, such as automated assembly lines or AI software, lower the cost of production and shift the entire supply curve to the right without requiring more inputs.
What is technology?
When consumer incomes decline during a recession, demand for spam and instant noodles increases, making them examples of this good category.
What are inferior goods?
Calculated as Nominal GDP} / Real GDP * 100, this price index measures the overall level of prices in an economy.
What is the GDP deflator?