Term
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Definition
| a situation in which there is not enough of a resource to meet all of everyone's wants |
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Term
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Definition
| the social science that seeks to understand the choices people make in using scarce resources to meet their wants |
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Term
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Definition
| the branch of economics that studies the choices of individual units--including households, business firms, and government agencies |
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Term
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Definition
| the branch of economics that studies large-scale economic phenomena, particularly inflation, unemployment, and economic growth |
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Term
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Definition
| the basic inputs of labor, capital, and natural resources used in producing all goods and services |
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Term
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Definition
| the contributions to production made by people working with their minds and their hands |
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Term
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Definition
| all means of production that are created by people--including tools, industrial equipment, and structures |
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Term
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Definition
| anything that people can use as a productive input in its natural state, such as farmland, building sites, forests, and mineral deposits |
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Term
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Definition
| the cost of a good or service measured in terms of the forgone opportunity to pursue the best possible alternative activity with the same time or resources |
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Term
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Definition
| the act of increasing the economy's stock of capital, that is, its supply of means of production made by people |
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Term
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Definition
| the process of looking for new possibilities--making use of new ways of doing things, being alert to new opportunities, and overcoming old limits |
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Term
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Definition
| the ability to produce a good or service at a relatively lower opportunity cost than someone else |
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Term
| Efficiency in Distribution |
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Definition
| a situation in which it is not possible, by redistributing existing supplies of goods, to satisfy one person's wants more fully without causing some other person's wants to be satisfied less fully |
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Term
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Definition
| a way of achieving coordination in which individual actions are guided by instructions from a central authority |
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Term
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Definition
| a way of achieving coordination in which individuals adjust their actions in response to cues from their immediate environment |
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Term
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Definition
| any arrangement people have for trading with one another |
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Term
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Definition
| a representation of the relationships among facts |
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Term
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Definition
| a synonym for theory; in economics, often applied to theories that take the form of graphs or equations |
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Term
| Production Possibility Frontier |
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Definition
| a graph that shows possible combinations of goods that an economy can produce given available technology and factor of production |
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Term
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Definition
| based on experience or observation |
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Term
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Definition
| the statistical analysis of empirical economic data |
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Term
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Definition
| a prediction of future economic events in the form "If A, then B, other things being equal" |
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Term
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Definition
| measure of the response of one variable to a change in another, stated as a ratio of the percentage change in one variable to the associated percentage change in another |
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Term
| Price Elasticity of Demand |
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Definition
| the ratio of the percentage change in the quantity of a good demanded to a given percentage change in its price, other things being equal |
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Term
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Definition
| price multiplied by quantity sold |
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Term
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Definition
| a situation in which quantity demanded changes by a larger percentage than price, so that total revenue increases as price decreases |
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Term
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Definition
| a situation in which quantity demanded changes by a smaller percentage than price, so that total revenue decreases as price decreases |
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Term
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Definition
| a situation in which price and quantity demanded change by the same percentage so that total revenue remains unchanged as price changes |
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Term
| Perfectly Inelastic Demand |
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Definition
| a situation in which the demand curve is a vertical line |
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Term
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Definition
| a situation in which the demand curve is a horizontal line |
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Term
| Income Elasticity of Demand |
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Definition
| the ratio of the percentage change in the quantity of a good demanded to a given percentage change in consumer incomes, other things being equal |
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Term
| Cross-Elasticity of Demand |
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Definition
| the ratio of the percentage change in the quantity of a good demanded to a given percentage change in the price of some other good, other things being equal |
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Term
| Price Elasticity of Supply |
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Definition
| the ratio of the percentage change in the quantity of a good supplied to a given percentage change in its price, other things being equal |
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Term
| Gross Domestic Product (GDP) |
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Definition
| a measure of the dollar value of total output of final goods and services produced within a nation's borders in a year |
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Term
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Definition
| in economics, a term that refers to data that have been adjusted for the effects of inflation |
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Term
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Definition
| in economics, a term that refers to data that have not been adjusted for the effects of inflation |
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Term
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Definition
| a synonym for real gross domestic product |
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Term
| Total Factor Productivity |
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Definition
| a measurement of improvements in technology and organization that allow increases in the output produced by given quantities of labor and capital |
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Term
| Natural (Potential) Level of Real Output |
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Definition
| the trend of real GDP growth over time, also known as potential real output |
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Term
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Definition
| the economy's current level of real output minus its natural level of real output |
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Term
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Definition
| a pattern of irregular but repeated expansion and contraction of aggregate economic activity |
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Term
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Definition
| a cyclical economic contraction that lasts six months or more |
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Term
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Definition
| an informal term for the period of low economic activity that began in December 2007 |
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Term
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Definition
| the percentage of the labor force that is unemployed |
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Term
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Definition
| a term used to refer to a person who is working at least 1 hut a week for pay or at least 15 hours per week as an unpaid worker in a family business |
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Term
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Definition
| A term used to refer to a person who is not employed but is actively looking for work |
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Term
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Definition
| the sum of all individuals who are employed and all individuals who are unemployed |
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Term
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Definition
| a person who would work if a suitable job were available but has given up looking for such job |
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Term
| Natural Rate of Unemployment |
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Definition
| the rate of unemployment that prevails when real output is at its natural level |
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Term
| Employment-Population Ratio |
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Definition
| the percentage of the non institutional adult population that is employed |
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Term
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Definition
| the portion of unemployment that reflects the short periods of unemployment needed for matching jobs with job seekers |
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Term
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Definition
| the portion of unemployment that reflects long periods out of work by people whose skills do not match those required for available jobs |
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Term
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Definition
| the difference between the actual rate of unemployment at a given point in the business cycle and the natural rate of unemployment |
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Term
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Definition
| a sustained increase in the average level of prices of all goods and services |
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Term
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Definition
| a rate of inflation that is low enough not to be a significant factor in business and individual decision-making |
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Term
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Definition
| payments to individuals that are not made in return for work they currently perform |
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Term
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Definition
| a policy of automatically adjusting a value or payment in proportion to changes in the average price level |
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Term
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Definition
| the interest rate expressed in the usual way: in terms of current dollars without adjustment for inflation |
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Term
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Definition
| the nominal interest rate minus the rate of inflation |
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Term
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Definition
| an episode during which the price level falls for a sustained period |
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Term
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Definition
| The willingness and ability of sellers to provide goods for sale in a market. |
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Term
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Definition
| the willingness and ability of buyers to purchase goods. |
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Term
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Definition
| The principal that an inverse relationship exists between the price of a good and the quantity of that good that buyers demand, other things being equal. |
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Term
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Definition
| A graphical representation of the relationship between the price of a good and the quantity of that good that buyers demand. |
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Term
| Change in Quantity Deamanded |
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Definition
| A change in the quantity of a good that buyers are willing and able to purchase that results from a change in the good's price, other things being equal, shown by a movement from one point to another along a demand curve. |
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Term
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Definition
| A change in the quantity of a good that the buyers are willing and able to purchase that is caused by a change in some condition other than the price of that good; a shift in the demand curve. |
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Term
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Definition
| A pair of goods for which an increase in the price of one causes an increase in demand for the other. |
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Term
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Definition
| A pair of goods for which an increase in the price of one causes a decrease in demand for the other. |
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Term
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Definition
| A good for which an increase in consumer income results in an increase in demand. |
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Term
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Definition
| A good for which an increase in consumer income results in a decrease of demand. |
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Term
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Definition
| A graphical representation of the relationship between the price of a good and the quantity of that good that sellers are willing to supply. |
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Term
| Change in Quantity Supplied |
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Definition
| A change in the quantity of a good that suppliers are willing and able to sell that results in a change in the good's price, other things being equal, shown by movement on the supply curve. |
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Term
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Definition
| A change in the quantity of a good that suppliers are willing and able to sell that results from a change in some conditions other than the good's price, shown by a shift in the supply curve. |
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Term
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Definition
| A condition in which buyers' and sellers' plans exactly mesh in the marketplace, so that the quantity supplied exactly equals the quantity demanded at a given price. |
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Term
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Definition
| A condition in which the quantity demanded of a good demanded at a given price exceeds the quantity supplied. |
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Term
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Definition
| a stock of good awaiting sale or use. |
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Term
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Definition
| A condition in which the quantity of a good supplied at a given price exceeds the quantity demanded. |
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Term
| Circular Flow of Income and Production |
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Definition
| The flow of goods and services between households and firms, balanced by the flow of payments made in exchange for goods and services. |
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Term
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Definition
| The total income of all types-- including wages, rents,interests, payments,and profits--that is paid in return for factors of production used in producing domestic product. |
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Term
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Definition
| All purchases of goods and services by households for the purpose of immediate use. |
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Term
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Definition
| An economy that has no links to the rest of the world. |
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Term
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Definition
| The saving, net tax, and import components of the circular flow. |
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Term
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Definition
| Tax revenue minus transfer payments. |
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Term
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Definition
| Payments by Government to individuals for pensions, unemployment compensation, and other payments that do not represent income from services that the recipients currently provide. |
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Term
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Definition
| The part of income that households do not use to buy goods and services or to pay taxes. |
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Term
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Definition
| The government purchase, investment, and net export components of the circular flow. |
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Term
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Definition
| Purchases of goods by all levels of government plus purchases of services from contractors and wages of government employments. |
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Term
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Definition
| Government purchases of goods and services plus transfer payments. |
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Term
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Definition
| The sum of fixed investment and inventory investment. |
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Term
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Definition
| Purchases of newly produced capital goods. |
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Term
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Definition
| Changes in stock of finished goods ready for sale, raw materials, and partially completed goods in process of production. |
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Term
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Definition
| An economy that has links to the outside world in the form of imports, exports, and financial transactions. |
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Term
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Definition
| A leakage from the circular flow consisting of payments for good and services purchased from the rest of the world. |
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Term
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Definition
| An injection into the circular flow consisting of payments received for goods and services sold to the rest of the world. |
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Term
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Definition
| Payments received for exports minus payments made for imports. |
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Term
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Definition
| Purchases of domestic assets by foreign buyers and borrowing from foreign lenders; also called capital inflows. |
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Term
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Definition
| Purchases of foreign assets by domestic residents or loans by domestic lenders to foreign borrowers; also known as capital outflows. |
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Term
| Planned Inventory Investment |
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Definition
| Changes in the level of inventory made on purpose, as part of a firm's business plan. |
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Term
| Unplanned Inventory Investment |
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Definition
| Changes in the level of inventory that arise from a difference between planned and actual sales. |
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Term
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Definition
| The sum of fixed investment and planned inventory investment. |
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Term
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Definition
| The sum of consumption, government purchases, net exports, and planned investments. |
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Term
| Marginal Propensity to Consume |
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Definition
| The proportion of each added dollar of real disposable income that households devote to consumption. |
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Term
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Definition
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Term
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Definition
| Term applied to any variable that is determined by noneconomic considerations, or by economis considerations that lie outside the scope of a given model. |
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Term
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Definition
| Term applied to any variable that is determined by other variables included in an economic model. |
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Term
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Definition
| The tendency of a given exogenous change in planned expenditure to increase equilibrium GDP by greater amount. |
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Term
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Definition
| a state of affairs in which it is impossible to make any change that satisfies one person's wants more fully without causing some other person's wants to be satisfied less fully |
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Term
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Definition
| a situation in which it is not possible given available knowledge and productive resources, to produce more of one good without forgoing the opportunity to produce some of another good |
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