Principles of Macroeconomics - Test 1

The flashcards below were created by user Anonymous on FreezingBlue Flashcards.

  1. economics
    the coordination of wants & desires given the mechanism
  2. 3 central problems of coordination
    • -what to produce
    • -how to produce
    • -who gets it
  3. if the marginal cost is more than the marginal benefit
    don't do it
  4. if the marginal cost is less than the marginal benefit
    do it
  5. opportunity cost
    the benefit you might have gained by choosing the next best alternative
  6. 3 economic forces
    • market
    • social
    • political
  7. market economic force
    invisible hand
  8. social economic force
    invisible handshake
  9. political economic force
    invisible foot [legal]
  10. positive economics
    economists often disagree with each other and occasionally themselves, but they can all agree: people respond to incentives
  11. normative economics
    "you should give the extra to a food bank"

    [if it says should or ought on the test is the answer]
  12. efficiency
    any point on the curve is consider efficient
  13. technical change
    why the curve can move
  14. points outside the curve are considered:
  15. law of one price [goods]
    creatable goods should be sold at a similar price
  16. law of demand
    price goes down, quantity demand goes up, other things constant
  17. demand factors
    • income
    • price of other goods
    • tastes
    • expectations
    • taxes or subsidies
  18. supply factors
    • price of inputs
    • technology
    • expectations
    • taxes & subsidies
  19. equilibrium
    where supply and demand intersect
  20. QS > QD
    excess supply surplus
  21. QD > QS
    excess demand shortage
  22. division of gains
    smaller countries get more of the gains than larger countries
  23. difference between recession and depression
    • recession is when you know someone who lost their job
    • depression is when you lost your job
  24. economies of scale
    if you have economies of scale you get more gains
  25. law of one prices [wages]
    compresses wages [all should be paid the same]
Card Set
Principles of Macroeconomics - Test 1
Show Answers