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The willingness and ability of a consumer to buy goods and services at a specific price
What is demand?
The value of the next best alternative foregone when making an economic decision
What is opportunity cost?
The basic economic problem
What is scarcity?
Statements that are objective and fact-based
What are positive statements?
An inflation-adjusted measure of the value of all goods and services produced in an economy
What is real GDP?
When an increase in national income (GDP) results in a proportionately larger rise in capital investment spending
What is the accelerator effect?
An economic system that combines elements of both capitalism and socialism
What is a mixed economy?
A price floor below which the price cannot legally fall
What is a minimum price?
How a change in personal wealth influences consumer spending and economic growth
What is the wealth effect?
The responsiveness of demand for one product when there is a change in the price of another product
What is cross elasticity of demand (XED)?
A tax that is based on the value of an item
What is an ad valorem tax?
When inflation rates are greater than 50% per month and persist for more than 30 consecutive days
What is hyperinflation?
The amount of goods or services that a unit of currency can buy at a given point in time
What is purchasing power?
When the consumption of a good or service provides benefits to third parties who are not directly involved in the transaction
What is a positive consumption externality?
The purchase of one product leads to a reduction in demand for an alternative
What is competitive demand?
The part of any economy that is neither taxed nor monitored by any form of government
What is the informal economy (informal sector or grey economy)?
The non-rational, emotional factors that influence economic behaviour and decision-making
What are (Keynesian) animal spirits?
A persistent and severe downturn in output and jobs that lasts more than one or two years or that results in a decline of at least 10% in annual GDP
What is a depression?
When workers' earnings don't adjust quickly to changes in labour market conditions
What are 'sticky' wages?
Involuntary unemployment due to a lack of aggregate demand for goods and services
What is cyclical unemployment?
A product that people consume more of as the price rises and vice versa, violating the law of demand
What is a giffen good?
When long-run average costs start to rise with increased output
What are diseconomies of scale?
The way that humans make decisions that depart from perfect economic rationality since we are limited by our mental capacity, the information available to us, and time
What is bounded rationality?
A prolonged period of slow economic growth
What is stagnation?
The name used for government ficsal policy which is aimed at reducing a government's deficit (or borrowing)
What is austerity?