Chapter 2

  1. circular-flow diagram
    a visual model of the economy that shows how dollars flow through markets among households and firms
  2. production possibilities frontier
    a 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. microeconomics
    the study of how households and firms make decisions and how they interact in markets
  4. macroeconomics
    the study of economy-wide phenomena, including inflation, unemployment, and economics growth
  5. positive statements
    claims that attempt to describe the world as it is
  6. normative statements
    claims that attempt to prescribe how the world should be
Card Set
Chapter 2
A.P. Economics textbook, Chapter 2 vocabularyciru