Chapter 2 Macroeconomics

  1. Circular Flow Diagram
    • visual model of the economy that shows how dollars flow through markets among households and firms
    • Inner Arrow = flow of inputs and outputs
    • Outer Arrow = flow of dollars
  2. Production Possibbilities Frontier
    graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
  3. Macroeconomics
    study of economywide phenomena, including inflation, unemployment, and economic growth
  4. Microeconomics
    study of how households and firms make decisions and how they interact in markets
  5. Positive Statements
    • claims that attempt to describe the world as it is
    • could use evidence to support claim
  6. Normative Statements
    claims that attempt to describe how the world should be
Card Set
Chapter 2 Macroeconomics
Vocab of Chapter 2 in Macroeconomics