MacroEconomics

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rebekaheh
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32107
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MacroEconomics
Updated:
2010-08-31 17:25:01
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Chapter One
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The Scope and Method of Economics
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  1. the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided
    Economics
  2. itis a behavioral, or social, science. in large measure it is the study of how people make choices. the choices that people make, when added up, translate into societal choices
    Economics
  3. The three fundamental concepts
    • Opportunity cost
    • Marginalism
    • Efficient markets
  4. the best alternative that we forgo, or give up, when we make a choice or decision.
    opportunity cost
  5. Limited
    Scarce
  6. the process of analyzing the additional or incremental costs or benefits arising from a choice or decision
    Marginalism
  7. costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.
    Sunk Costs
  8. a market in which profit opportunities are eliminated almost instantaneously
    efficient market
  9. it teaches us a way of thinking and helps us make decisions
    the study of economics
  10. the period in england during the late eighteenth and early nineteenth centuries in which new manufacturing technologies and improved transportation gave rise to the modern factory system and a massive movement of the population from the countryside to the cities.
    Industrial Revolution
  11. is an essential part of the study of society
    the study of economics
  12. is essential to an understanding of global affairs
    An understanding of economics
  13. To be an___________a knowledge of economics is essential.
    • Informed Citizen
    • when we participate in the political process, we are voting on issues that require basic understanding of economics.
  14. looks at the individual unit - the household, the firm, the industry. it sees and examines the "trees."
    microeconomics
  15. looks at the whole, the aggregate. it sees and analyzes the "forest"
    macroeconomics
  16. an approach to economics that seeks to understand bahvior and the operation of system without making judgements. it describes what exists and how it works
    Positive economics
  17. An approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. also called policy economics
    normative economics
  18. the compilation of data that describe phenomena and facts
    Descriptive Economics
  19. A statement or set of realted statements about cause and effect, action and reaction
    Economic Theory
  20. A formal statement of a theory, usually a mathematical statement of a presumed relationship between two or more variables
    Model
  21. A measure that can change from time to time or from observation to observation
    Variable
  22. The principle that irrelevant detail should be cut away
    Ockham's razor
  23. a device used to analyze the relationship between two variables while values of other variables are held unchanges
    • Ceteris Paribus, or all else equal
    • using the device of ceteris paribus is one part of the process of abstraction. in formulating economic theory, the concept helps us simplify reality to focus on the relationships that interest us.
  24. the most common method of expressing the quantatative relationship between two variables is.....
    graphing that relationship on a two-dimentional plane.
  25. the erroneous belief that what is true for a part is neccessarily true for the whole
    fallacy of composition
  26. the collection and use of data to test economic theories
    empirical economics
  27. Criteria for judging economic outcomes
    1. Efficiency
    2. Equity
    3. Growth
    4. Stability
    Economic Policy
  28. Economic Policy
    producing what people want at the least possible cost
    1)Efficiency
    2)Equity
    3)Growth
    4)Stability
    Efficiency
  29. Economic Policy
    Fairness
    1)Efficiency
    2)Equity
    3)Growth
    4)Stability
    Equity
  30. Economic Policy
    an increase in the total output of an economy
    1)Efficiency
    2)Equity
    3)Growth
    4)Stability
    Growth
  31. Economic Policy
    A condition in which national output is growing steadily, with low inflation and full employment of resources.
    1)Efficiency
    2)Equity
    3)Growth
    4)Stability
    Stability

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