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GraphsGraphs Unit 1Unit 1 Unit 2Unit 2 Unit 3Unit 3 RandomRandomKey TermsKey Terms

- $100- $100

Scarcity

The basic economic problem that arises because people have unlimited wants but resources are limited.

- $200

Incentive

A cost or benefit that motivates a decision or action by consumers,businesses, or other participants in the economy.

- $300

Marginal Cost

The change in total cost that comes from making or producing one additional item.

- $400

C+I+G+Xn(consumers + investment + govt spending + net exports- net imports)

Formula for GDP

- $500

Unemployment that occurs when people take time to find a job.

Frictional Unemployment

- $100

PPC Curve

- $200Demand and Supply

- $300

Business Cycle

- $400

Investment Demand

- $500

Laffer Curve

- $100

True or FalseChanges in price shift the curve?

False

- $200

Production Possibilities Curve (PPC)

Shows the tradeoffs that are made in producing only two goods. More of one good means that less of a second good is produced.

- $300

Law of Demand

As the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.

- $400What causes a shift in demand?

• Taste and preferences• Number of consumers• Price of related goods• Income• Future Expectations

What is theoretical economics?

When economists use the scientific method to make generalizations and abstractions to develop theories.

$500

- $100

What is Inflation?

The rate at which the general level of prices for goods and servicesis rising, and, subsequently, purchasing power is falling.

- $200

What is the best way to measure a nation’s standard of living?

Real GDP per capita (per person)

- $300

Why do some nation’s have higher GDP’s?

1. Availability & quality of natural resources2. Availability of capital3. Economic System

- $400

What are the 3 major goals of an economy?

1. Promote economic growth2. Prevent unemployment3. Keep prices stable (limit inflation)

- $500

What isn’t included in GDP?

1. Intermediate Goods2. Nonproduction Transactions 3. Government Spending4. Net Exports

- $100

What is Aggregate Demand?

The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.

- $200

What does, “Change in Consumption/ Change in Income”, show?

The Multiplier Effect (MPC)

- $300

How do you shift Aggregate Demand?

1. Change in Consumer Spending2. Change in Investment Spending3. Change in Government Spending4. Change in Net Export Spending

- $400

If prices were to fall, the cost of resources must fall or firms wouldgo out of business.

The Ratchet Effect

- $500

What are 4 non-income determinants of consumption & savings.

1. Wealth 2. Expectations3. Taxations4. Household Debt

- $100

Opportunity Cost

The cost of the next best use of time and money when choosing todo one thing or another.

- $200

Money Market

- $300

What is the study of choices?

Economics

- $400

What are 3 causes of inflation?

1. The govt. prints too much money2. Rising labor costs3. Rising imported raw materials costs

- $500

What is Keynesian Economics?

An economic theory of total spending in the economy and its effects on output and inflation.