CLEP Macroecon Unit 1 part 1

  1. capitalism
    an economic and political system in which country's trade and industry are contolled by private owners for profit
  2. communism
    all property is publicly owned and each person works and is paid according to their abilities/needs
  3. positive economics
    a subset of economics that analyzes the way the economy actually operates
  4. normative economics
    a subset of economics founded on value judgements and leading to assertions of what ought to be
  5. circular flow model
    a model of how the economy's resources, money, goods, and services flow between households and firms through research and product markets
  6. scarcity
    state of insufficency of resources to satisfy people's unlimited wants
  7. oopportunity cost
    quantity of other goods that must be given to obtain a good
  8. nonrenewable resources
    limited supply of the resource
  9. renewable resource
    self-renewing natural resource
  10. Adam Smith's invisible hand
    all of us, acting on our own self interest (greed) will benefit others in society
  11. origin of a graph
    point of reference (0,0)
  12. Positive Slope
    upward-sloping curves, sloping from SW to NE
  13. negative slope
    downward-sloping curves, from NW to SE
  14. Hill Shaped Curve and U Shaped Curve
    show relationship between the total utility or benefit derived from consuming a good and the quantity of goods consumed
  15. independent variable
    factor you manipulate/change
  16. dependent variable
    the result of the independent variable
  17. consumption good
    goods that are ultimately consumed rather than used in production of another good
  18. capital good
    a manufactured means of production
  19. production possibilities (and production possibilities curve)
    the various combinations of goods that can be produced in an economy when it uses its available resources and technology
  20. equilibrium price
    the price that equates quantity demanded to quantity supplied
  21. supply and demand relationship
    an economic model of price determination in a market, which includes the need for the product and the number of products available
Card Set
CLEP Macroecon Unit 1 part 1
key terms and concepts