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Principles of MarcroEconomics: Vocab
Vocab helpful for econ
30
Economics
Undergraduate 1
09/15/2011

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Term
Natural Resources
Definition
The lands, water, metals, minerals, animals, and other gifts of nature that are available for producing goods and services.
Term
Scarcity
Definition
The perpetual state of insufficiency of resources to satisfy people's unlimited wants.
Term
Economics
Definition
The study of how people work together to transform resources into goods and services to satisfy their most pressing wants, and how they distribute these goods and services among themselves.
Term
Consumer Sovereignty
Definition
The ability of consumers to exercise complete control over what goods and services the economy produces (or doesn't produce) by choosing what goods and services to buy (or not buy).
Term
Economic Model
Definition
An abstractin of an economic reality. It can be expressed pictorially, graphically, algebraically, or in words. [image]
Term
Ceteris Paribus
Definition
The Latin phrase meaning "everything else being equal."
Term
Circular Flow Model
Definition
A model of how the economy's resources, money, goods, and services flow between households and firms through resource and product markets. [image]
Term
Household
Definition
An economic unit of one or more persons, living under one roof, that has a source of income and uses it in whatever way it deems fit.
Term
Firm
Definition
An economic unit that produces goods and services in the expectation of selling them to households, other firms, or government.
Term
Invisible hand
Definition
A theory that a society would be able to set a limit to what they take from resources.
Term
Microeconomics
Definition
A subarea of economics that analyzes individuals as consumers and producers, and specific firms and industries. It focuses especially on the market behavior of firms and households.
Term
Macroeconomics
Definition
A subarea of economics that analyzes the behavior of the economy as a whole.
Term
Positive economics
Definition
A subset of economics that analyzes the way the economy actually operates.
Term
Normative economics
Definition
A subset of economics founded on value judgments and leading to assertions of what ought to be.
Term
Econometrics
Definition
The use of statistics to quantify and test economic models
Term
Factors of Production
Definition
Any resource used in a production process. Resources are grouped into labor, land, capital, and entrepreneurship
Term
Labor
Definition
The physical and intellectual effort of people engaged in producing goods and services
Term
Capital
Definition
Manufactured goods used to make and market other goods and services.
Term
Human Capital
Definition
The investment in workers' health and knowledge, acquired through education, training, and/or experience that enhances their productivity.
Term
land
Definition
The knowledge and skills acquired by labor, principally through education and training.
Term
Entreprenuer
Definition
A person who alone assumes the risks and uncertainties of a business.
Term
Production possibilities
Definition
The various combinations of goods that can be produced in an economy when it uses its available resources and technology efficiently.
Term
Opportunity Costs
Definition
The quantity of other goods that must be given up to obtain a good.
Term
Law of increasing costs
Definition
The opportunity cost of producing a good increases as more of the good is produced. The law is based on the fact that not all resources are suited to the production of all goods and that the order of use of a resource in producing a good goes from the most productive resource unit to the least.
Term
Innovation
Definition
An idea that eventually takes the form of new, applied technology.
Term
Underemployed resources
Definition
The less than full utilization of a resource's productive capabilities.
Term
Economic Efficiency
Definition
The maximum possible production of goods and services generated by the fullest employment of the economy's resources.
Term
Labor specialization
Definition
The division of labor into specialized activities that allow individuals to be more productive.
Term
Absolute Advantage
Definition
A country's ability to produce a good using fewer resources than the country it trades with.
Term
Comparative Advantage
Definition
A country's ability to produce a good at a lower opportunity cost than the country with which it trades.
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