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Macro enonomics Ceasar
Chapter 1 test
80
Economics
Undergraduate 2
02/07/2011

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Term
names of things we are comparing are called
Definition
Verticle -y axis on table this is a verible the amounts under the varibles are values.
the varible has different values


Horizontal - X axis
Term
the line on the graph is / we say there is a _____ or _____ relationship
Definition
positive or direct
Term
The line on the graph is downward from top to bottom we say there is a ____ or ___ relationship.
Definition
negative or inverse
Term
If there is a postive relationship between two variables we say as one varible ___ the other varible ___
Definition

increase the other varible inc

or

Dec the decrease

Term
If there is a negative relationship between the two varibles we say that if one varible ___ the other ____
Definition
Inc the dec or dec the inc
Term
If the line on the graph is verticle or horizontal there is ____ relationship
Definition
No relationship
Term
Ceteris Paribus
Definition
"other things equal" or we are going to analyze the relationship between two varibles. ( all other things are considered constant and unchanging)
Term
What is the scientific method
Definition
1. Series of Steps
2. to try to explain
3. something we observe
4. so that we can develop cause & effect statements
5. that we use to predict what will happen if we change this or that( cause &effect statements)
6. That we use to explain things we observe that we could not explain before
Term
What are the 5 STEPS of the scientific Method
Definition
1. Hypothesis
2. Hypothesis testing
3. theory
4. laws and principals
5. Models
Term
Define #1 Hypothesis
Definition
After careful observation of some observable phenomena, a cause and effect statement is proposed to explain the cause behind some observed effect.
Term
Define #2 Hypothesis Testing
Definition
Experiments are conducted which hold everything else constant (ceteris paribus) except the cause and effect in question and yeild obserable results that wil either support or reject the hypothesis. If we cant come-up with a valid experiment to test the hypothesis then we must go back to step 1 and come-up with a new hypothesis
Term
[image]
Definition
The Points are the values of the varibles and we say this is a positve or direct relationship
Term
[image]
Definition
This is a positve or direct relationship the points represent the values of the varabile pair
Term
[image]
Definition
The Laws of Supply and Demand
Term
The Law of Supply says
Definition
there is a positive relationship between possible prices and possible quantities supplied, where an increase in possible price causes an increase in possible quantity supplied
Term
The Law of Demand says
Definition
there is a negative relationship between possible prices and possible quantities demanded, where an increase in possible price causes a decrease in possible quantity demanded.
Term
the scientific method does not tell us whether a hypothesis, theory, law, or principle is
Definition
true.
Term
MICROECONOMICS...
Definition
“looking at the individual parts” (such as individual consumers, individual business firms, and individual industries).The study of how households and businesses interact in markets and make choices, and how the government attempts to influence these choices
Term
MACROECONOMICS...
(this course)
Definition
looking at the whole, or the sum of the parts” (such as whether the entire economy is getting bigger or getting smaller). The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth. Macroeconomics also concerns itself with studying, investigating and trying to understand the business cycle: Alternating periods of economic expansion and economic recession.
Term
THE “FOUNDATION" OF ECONOMICS
Definition
IS THAT WE ASSUME PEOPLE HAVE AN UNLIMITED APPETITE(WANTS) FOR THINGS THAT THEY WANT...
Term
EVERYONE HAS “LIMITED” OR “SCARCE” RESOURCES AVAILABLE TO GET THOSE WANTS
Definition
satisfy their “wants” within the constraint of having a limited budget
Term
An economy
Definition
is an organized system that produces goods and services
Term
We use economic resources to produce goods (like a car) and services (like a massage). How many resources (inputs, or factors of production) are there?
Definition
There are four resources
Term
What are the names of the resources (factors of prodution)(inputs)
Definition
Property Resources A)Land (also called natural resource) (B)Captial (tractor and things that we use to produce)
Human Resources (C) Labor (D) Entrarepreneuarail ability
Term
The more captial we have the more we can
Definition
produce
Term
Entrepreneurial ability-
Definition
those human beings that have a special and rare ability to successfully bring together land, capital & labor to produce goods and services PROFITABLY
Term
The 5 assumptions-
Definition
1. limited resources
2. no chage in the resources
3. no change in technology
4. full employment
5. productive effeniency
Term
1.limited resources
Definition
at some point in time there is always a limited amount of resources (land, capital, labor & entrepreneurial abilty)
Term
2. no change in resources
Definition
at some point in time the amount of land, capital, labor, & entreprenaurial abilty is fixed or constant or cannot change.
Term
3. no change in technology
Definition
Technology is anything that allows us to produce more than before without changing the amount of resources
Term
4.Full employment
Definition
using all the limited resources available.
Term
5.Production Effiency
Definition
1. we are getting the most we can out of our resources. 2. we are using the minium amount of resources required.
Term
Human capital
Definition
amount of teaching or training .
Term
Consumer good
Definition
does not help to produce something else. ( is not capital)
Term
Capital good
Definition
is a good that helps us to produce something else (a capital good is capital)
Term
If all things are in effect 1. limited resources 2. no change in resources 3. no change in technology 4. full employment 5. productive effeciency it is said that we must ____ one thing in order to have more of another thing.
Definition
Give up
Term
[image]
Definition
Production Possibilities Curve
Term
Prodution possiblities curve
Definition
maxium combintions when all assumptions are in effect.
Term
Points anywhere “outside” the production possibilities curve (upside)
Definition
such as point W, are unattainable (because all resources were already efficiently being used to get to points on the curve, we can’t get to points anywhere outside the curve without more resources or better technology).
Term
Points anywhere “inside” the production possibilities curve (Downside)
Definition
are attainable
but
we either do not have full employment or we do not have productive efficiency or we have less resources or we have worse technology.
Term
[image]
Definition
This shows economic growth. A' is called A prime
Term
Production possibilities curve of frontier
Definition
means border for the maxium production when all assumtions are in effect
Term
[image]
Definition
Money flow is perfectly circular
The green line of money does not change
Term
Two sectors of economy
Definition
1. households
2. Business
Term
Housholds- sell ___ and buy____
Definition
Resources and buy goods and services(products)
Term
Business (FIRMS) - buy_____ and sell____
Definition
resources from the households and sell the goods and products to the households
Term
Household resources (4)
Definition
1. land
2. capital
3. labor
4. entreprenaulrial ability
Term
Business sell
Definition
goods and services(products)
Term
Household income for Land is ____
capital____
labor ______
entreprenaurial ability ______
Definition
Land -rent
capital-interes
labor-wages
Entreprenuarial abilityy- profit
Term
Business income from goods and services (products) is
Definition
Revenue
Term
When a household buys goods and service it is called their
Definition
consumption
Term
When a business buys resources it is called their
Definition
cost
Term
Resources from the household to the buyers go through the ______ market which sets the ______
Definition
RESOURCE market which sets the PRICE
Term
When a household buys Goods and services from a business it goes through the _____ market which sets the ____
Definition
PRODUCT market which sets the price
Term
Resources are not perfectly circular due to
Definition
Waste
Term
[image]
Definition
Government provide goods and services to the business and household in the form of roads, millitary protection and transfer payments.

The Goods and service that flow FROM the government do not go through the resource or product markets.

Businesses and households pay taxes.


Goverment buys resourses and products from the markets.
Term
phases of the business cycle
Definition
peak, recession, through,expansion, peak, recession and through expansion, peak
Term
Peak-
Definition
turning point
Term
recession-
Definition
is the period of time between A PEAK and A TROUGH during which the economy is shrinking in size
Term
through-
Definition
turning point
Term
expansion-
Definition
is the period of time between A TROUGH and A PEAK during which the economy is growing in size
Term
money goes into the goverment via taxes from households and businesses and then it goes out via
Definition
1.Government spending for goods, services, and resources
2. transfer payments (SS, medicaid)
Term
Economic models
Definition
graphs
Term
Define Step (3): Theory
Definition
If, after many repetitions of Step (2) with different experiments, the results of the new experiments consistently support the hypothesis and the hypothesis is not rejected, then the hypothesis is now referred to as a theory.
Term
define step 4: Laws & Principles
Definition
If, after continued repetition of Step (2) with even more different experiments, the hypothesis still remains un-rejected decade after decade after decade, the hypothesis is now referred to as a law or principle.
Term
Define Step (5): Models
Definition
Combinations of 2 or more laws & principles that allow us to see interrelationships and cause & effect relationships which would otherwise not be so obvious without combining the laws & principles.
Term
[image]
Definition
Business cycle
Term
Recession
Definition
The period of a business cycle during which the economy’s total output is decreasing (the economy shrinks in size from a peak to a trough)
Term
Expansion
Definition
The period of a business cycle during which the economy’s total output is increasing (the economy expands in size from a trough to a peak).
Term
Expansion sub phases-
Definition
Recovery- from the through to the point of where the last peak was
Prosperity- piont from where the last peak was to the peak of the current expansion
Term
Gross domestic product (GDP) is defined
Definition
as the market value ($) of all final goods and services produced within a country during a period of time.
Term
period of time-
Definition
we mean GDP is calculated over a year or quarter (i.e. 3 months
Term
final goods and services
Definition
we mean we count only goods and services purchased by a final user (we don’t count intermediate goods).
Term
intermediate good or service
Definition

is a good or service that is used as an input into the production of another good or service.

 

(Capital)

Term
market value
Definition
we mean GDP is reported as a dollar amount, (even though GDP is supposed to be a measure total production).
Term
Economic growth
Definition
is the ability to produce a larger total output
Term
Capital AKA
Definition
itermediate good,Real capital, Physical capital
Term
economic growth is caused by
Definition
increase in resources, better resources, or introdution of technology
Term
Total output
Definition
is the GDP
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