question

absolute advantage

answer

the ability to produce more of a good than all other producers

question

absolute (or money) prices

answer

the price of a good measured in units of currency

question

accounting profit

answer

the difference between total revenue and total explicit cost

question

aggregate demand curve

answer

the negative relationship between all spending on domestic output and the average price level of that output

question

aggregate income

answer

the sum of all income earned by suppliers of resources in the economy

question

aggregate spending (GDP)

answer

the sum of all spending from four sectors of the economy

question

aggregate supply curve

answer

the positive relationship between the level of domestic output produced and the average price level of that output

question

aggregation

answer

the process of summing the microeconomic activity of households and firms into a macroeconomics measure of economic activity

question

all else equal

answer

the assumption that all other variables are held constant so that we can predict how a change in one variable affects a second. Also known as the "Ceteris Paribus" assumption

question

allocative efficiency

answer

Production of the combination of goods and services that provides the most net benefit to society. This is achieved when the MB=MC of the next unit

question

appreciating currency

answer

an increase in the price of one currency relative to another currency

question

asset demand for money

answer

the amount of money demanded as an asset is inversely related to the real interest rate

question

assets of a bank

answer

anything owned by the bank or owed to the bank

question

automatic stabilizers

answer

Fiscal policy mechanisms that automatically regulate, or stabilize, the macroeconomy as it moves through the business cycle

question

autonomous consumption

answer

the amount of consumption that occurs no matter the level of disposable income

question

autonomous investment

answer

the level of investment determined by investment demand and independent of GDP

question

autonomous saving

answer

the amount of saving that occurs no matter the level of disposable income

question

Average Fixed Cost (AFC)

answer

total fixed cost divided by output

question

Average Product (APL) of Labor

answer

total product divided by the labor employed

question

average tax rate

answer

the proportion of total income paid to taxes

question

average total cost (ATC)

answer

Total cost divided by output

question

average variable cost (AVC)

answer

Total variable cost divided by output

question

balanced-budget multiplier

answer

a change in government spending offset by an equal in taxes results in a multiplier effect equal to one

question

balance of payments statement

answer

A summary of the payments received by the US from foreign countries and the payments sent by the US to foreign countries

question

balance sheet or t-account

answer

A tabular way to show a bank's assets and liabilities

question

base (or reference) year

answer

the year that serves as a reference point for constructing a price index and comparing real values over time

question

bond

answer

a certificate of indebtedness from the issuer to the bond holder

question

budget deficit

answer

exists if government spending exceeds the tax revenue collected

question

budget surplus

answer

exists if tax revenue collected exceeds the tax revenue collected

question

business cycle

answer

the periodic rise and fall in economic activity around its long-term growth trend

question

capital account

answer

this account shows the flow of investment on real or financial assets between a nation and foreigners

question

capitalist market system (capitalism)

answer

an economic system based upon the fundamentals of private property, freedom, self-interest, and prices.

question

cartel

answer

firms that agree to maximize their joint profits rather than compete

question

circular flow of economic activity (or circular of goods and services)

answer

a model that shows how households and firms circulate resources, goods, and incomes through the economy

question

Classical school

answer

a macroeconomic model that explains how the economic naturally tends to come to full employment in the long run

question

closed economy

answer

a model assuming no foreign sector (imports and exports)

question

collusive oligopoly

answer

models where firms agree to work together to mutually improve their situation

question

comparative advantage

answer

the ability to produce a good at a lower opportunity cost than other producers

question

complementary goods

answer

two goods that provide more utility when consumed together than when consumed separately (i.e. milk and cookies)

question

constant returns to scale

answer

the horizontal range of long-run average total cost where LRAC is constant over a variety of plant sizes

question

constrained utility maximization

answer

Given prices and income, a consumer stops consuming a good when the price paid for the next unit is equal to the marginal utility recieved

question

consumer price index (CPI)

answer

the price index that measures the average price level of the items in the base year market basket. This is the main measure of consumer inflation

question

consumer surplus

answer

the difference between a buyer's willingness to pay and the price actually paid

question

consumption and saving schedules

answer

tables that show the direct relationships between disposable income and consumption and saving

question

consumption function

answer

a positive relationship between disposable income and consumption saving

question

consumption possibility frontier

answer

the line that illustrates all possible combinations of goods that two nations can consume with specialization and trade

question

contraction

answer

a period where real GDP is falling

question

contractionary fiscal policy

answer

lower government spending or higher net taxes to shift AD to the left to full employment and reduce inflationary pressures

question

contractionary monetary policy

answer

decreases in the money supply to increase real interest rates, shift AD to the left to full employment, and reduce inflationary pressures

question

cost of living adjustment

answer

an annual adjustment to a salary (or pension) so that the purchasing power of income remains constant. This adjustment is typically based upon the change in the consumer price index

question

cross-price elasticity of demand

answer

a measure of how sensitive the consumption of good X is to a change in the price of good X

question

crowding out effect

answer

typically the result of government borrowing to fund deficit spending, this is the decline in spending in one sector due to an increase in spending from another sector

question

current account

answer

this account shows current import and export payments of both goods and services investment income received by US citizens who invest abroad

question

dead weight loss

answer

the lost net benefit to society caused by a movement from the competitive market equilibrium (more taxes), cf Laffer Curve

question

debt financing

answer

a firm's way of raising investment funds by issuing bonds to the public

question

decision to invest

answer

a firm invests in projects if the expected rate of return is at least as great as the real interest rate

question

deflation

answer

a decline in the overall price level

question

demand curve

answer

shows the quantity of a good demanded at all prices

question

demand for labor

answer

shows the quantity of labor demanded at all wages. Labor demand for a firm hiring in a competitive labor market is MRPt

question

demand-pull inflation

answer

Inflation that results from stronger AD as it increases in the upward sloping range of AS

question

demand schedule

answer

a table showing quantity demanded for a good at all prices

question

depreciating currency

answer

a decrease in the price of one currency relative to another currency

question

depression

answer

a prolonged, deep trough in the business cycle

question

derived demand

answer

Demand for a resource arising from the demand for the goods produced by the resource

question

determinants of demand

answer

the external factors that shift demand to the left or right

question

determinants of supply

answer

the external factors that influence supply. When thee variables change, the entire supply curve shifts to the left or right

question

discount rate

answer

the interest rate commercial banks pay on short-term loans from the Fed

question

discouraged workers

answer

Citizens who have been without work for so long that they become tired of looking for work and drop out of the labor force. Because these citizens are not counted in the ranks of the unemployed, the reported unemployment rate is understated

question

disequilibrium

answer

any price where the quantity demanded does not equal the quantity supplied

question

disposable income (DI)

answer

the income a consumer has to spend or save once they have paid out net taxes

question

diseconomies of scale

answer

the upward part of the long-run average total cost curve where LRAC rises as plant size rises

question

dissaving

answer

another way of saying that saving is less than zero

question

domestic price

answer

the equilibrium price of a good in a nation without trade

question

dominant strategy

answer

a strategy that is always the best strategy to pursue, regardless of what a rival is doing

question

double counting

answer

the mistake of including the value of intermediate stages of production in GDP on top of the value of the final good

question

economic costs

answer

the costs of explicit and implicit costs of production

question

economic growth

answer

the increase in an economy's PPF over time

question

economic profit

answer

the difference between total revenue and total economic cost

question

economics

answer

the study of how society allocates scarce resources

question

economies of scale

answer

the downward part of the long-run average total cost curve where LRAC falls as plant size rises

question

egalitarianism

answer

the philosophy that all citizens should receive equal share of all economic resources

question

elasticity

answer

measures the sensitivity, or responsiveness, of a choice to a change in an external factor

question

elasticity along the demand curve

answer

at the midpoint of a linear demand curve, Ed=1. Above the midpoint demand is elastic and below the midpoint is inelastic

question

equation of exchange

answer

the equation says that nominal GDP (P*Q) is equal to the quantity of money (M) multiplied by the number of times each dollar is spent in a year (V)

question

equilibrium GDP

answer

the level of real GDP where real domestic production is equal to real domestic spending

question

equity financing

answer

the firm's method of raising funds for investment by issuing shares of a stock to the public

question

excess capacity

answer

the difference between the long-run output in monopolistic competition and the output at minimum average total cost

question

excess demand

answer

the difference between quantity demanded and quantity supplied. A shortage.

question

excess reserves

answer

the portion of a deposit that may be loaned to borrowers

question

excess supply

answer

the difference between quantity supplied and quantity demanded. A surplus.

question

exchange rate

answer

the amount of one currency you must give up to get one unit of the second currency

question

excise tax

answer

a per unit tax on a specific good or service

question

expansion

answer

a period where real GDP is growing

question

expansionary fiscal policy

answer

increases in government spending or lower net taxes meant to shift AD to the right towards full employment, and reduce the unemployment rate

question

expansionary monetary policy

answer

increases in the money supply meant to decrease real interest rates, shift AD to the right toward full employment, and reduce the unemployment rate

question

expected rate of return (r)

answer

the rate of profit the firm anticipates receiving on investment expenditures

question

explicit costs

answer

direct, purchased, out-of-pocket costs, paid to resource suppliers outside the firm. Also referred to as accounting costs.

question

exports

answer

goods and services produced domestically but sold abroad

question

factors of production

answer

inputs or resources that go into the production function to produce goods and services

question

fiat money

answer

paper and coin money with no intrinsic value but used to make transactions because the government declares it to be legal tender (Go Illegal Currency!)

question

final goods

answer

goods that are ready for their final use by consumers and firms

question

the firm

answer

an organization that employs factors of production to produce a good or service that it hopes to profitably sell

question

fiscal policy

answer

Deliberate changes in government spending and net tax collection to affect economic output, unemployment, and price level

question

fixed inputs

answer

Production inputs that cannot be changed in the short run

question

foreign sector substitution effect

answer

the process of domestic consumers looking for foreign goods when the domestic price level rises, thus reducing the quantity of domestic output consumed

question

four-firm concentration ratio

answer

the sum of the market share of the four largest firms in an industry

question

fractional reserve banking

answer

a system in which only a fraction of the total money deposited in banks is held in reserve

question

free rider

answer

an individual who receives the benefit of a good without incurring any cost for the good

question

free-rider problem

answer

the lack of private funding for a public good due to the presence of free riders

question

full employment

answer

exists when the economy is experiencing no cyclical employment

question

functions of money

answer

money serves as a medium of exchange, a unit of account and a store of value

question

game theory

answer

an approach for modeling the strategic interactions of firms in oligopoly markets

question

Gini ratio

answer

a measure of income inequality. As it gets closer to zero, the more unequally the income is distributed

question

Gross Domestic Product (GDP)

answer

the market value of all final goods and services produced within a nation in a given period of time

question

GDP price deflator

answer

the price index that measures the average price level of goods and services that make up GDP

question

human capital

answer

the amount of knowledge and skills that labor can apply to the work that they do

question

implicit costs

answer

indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur

question

imports

answer

Goods produced abroad and consumed domestically

question

incidence of tax

answer

the division of tax between consumers and producers

question

income effect

answer

due to a higher price, the change in quantity demanded that results from a change in the consumer's purchasing power (or real income)

question

income elasticity

answer

a measure of how sensitive consumption of a good is to a change in consumers' income

question

inferior goods

answer

a good for which demand decreases with an increase in consumer income

question

inflation

answer

an increase in the overall price level

question

inflation rate

answer

the percentage change in the price level from one year to the next

question

inflationary gap

answer

the amount by which equilibrium real GDP exceeds full employment GDP

question

interest rate effect

answer

the process of reduced domestic consumption due to a higher price level causing an increase in the real interest rate

question

intermediate goods

answer

goods that require further modification before they are ready for their final use

question

investment spending

answer

spending on physical capital, inventories, and new construction

question

investment demand

answer

the negative relationship between the real interest rate and the cumulative dollars invested

question

investment tax credit

answer

a reduction in taxes for firms that invest in new capital like a factory or a piece of equipment

question

Keynesian school

answer

a macroeconomic model that believes the economy is unstable and does not naturally move to full employment in the long run

question

labor force

answer

the sum of all individuals 16 years and older who are either currently employed (E) or unemployed (U). LF=E+U

question

Law of Demand

answer

all else equal, when the price of a good rises, the quantity demanded of that good falls

question

Law of Diminishing Marginal Utility

answer

in a given time period, as consumption of an item increases, the marginal (additional) utility from that item falls

question

Law of Diminishing Marginal Returns

answer

as successive units of a variable input are added to a fixed input, beyond some point the marginal product declines

question

Law of Increasing Costs

answer

as more of a good is produced, the greater is its opportunity (or marginal) cost

question

Law of Increasing Marginal Cost

answer

as a producer produced more of a good, the marginal cost rises

question

Law of Supply

answer

All else equal, when the price of a good rises, the quantity supplied of that good rises

question

least-cost rule

answer

the combination of labor and capital that minimizes total costs for a given production rate is where MPl/Pl=MPk/Pk

question

liability of a bank

answer

anything owned by depositors or lenders to the bank

question

liquidity

answer

a measure of how easily an asset can be converted to cash

question

loanable funds market

answer

a hypothetical market where borrowers (investors) demand more funds at a lower real interest rate and lenders (savers) supply more funds at a higher real interest rate

question

long run

answer

a period of time long enough for the firm to alter all production inputs, including plant size

question

Lorenz curve

answer

a graphical device that shows how a nation's income is distributed across the nation's households

question

luxury

answer

a good for which the proportional increase in consumption exceeds the proportional increase in income

question

M1

answer

the most liquid measure of money supply, including cash, checking deposits, and traveler's checks

question

M2

answer

M1 plus savings deposits small time deposits and money market and mutual funds balances

question

M3

answer

M2 plus large time deposits

question

macroeconomic long run

answer

a period of time long enough for input prices to have fully adjusted to market forces, all input and output markets are in equilibrium and the economy is operation at full employment

question

macroeconomic short run

answer

a period of time during which the prices of goods and services are changing in their respective markets, but the input prices have not yet adjusted to those changes in the product markets

question

marginal

answer

the next unit, or increment of, an action

question

marginal analysis

answer

making decisions based upon weighing the marginal benefits and costs of that action. the rational decision maker chooses an action if the MB is greater or equal than the MC

question

marginal benefit

answer

the additional benefit received from the consumption of the next unit of a good or service

question

marginal cost (MC)

answer

the additional cost of producing one more unit of output

question

marginal productivity theory

answer

the theory that a citizen's share of economic resources is proportional to the marginal revenue product of his or her labor

question

Marginal Product of Labor (MPL)

answer

the change in total product resulting from a change in the labor output

question

Marginal Propensity to Consume (MPC)

answer

the change in consumption caused by a change in disposable income. The slope of a consumption function.

question

Marginal Propensity to Save (MPS)

answer

the change in saving caused by a change in disposable income. The slope of the saving function

question

Marginal Resource Cost (MRC)

answer

The change in a firm's total cost from the hiring of an additional unit of input

question

Marginal Revenue Product of Labor (MRP)

answer

the change in a firm's total revenue from hiring an additional unit of input

question

marginal tax rate

answer

the rate paid on the last dollar earned, calculated by taking the ratio of the change in taxes divided by the change in income

question

marginal utility

answer

the change in an individual's total utility from the consumption of an additional unit of a good or service

question

market

answer

a group with buyers and sellers of a good or service

question

market basket

answer

a collection of goods and services used to represent what is consumed in the economy

question

market economy

answer

an economic system in which resources are allocated through the decentralized decisions of firms and consumers

question

market equilibrium

answer

exits at the only price where the quantity supplied equals the quantity demanded. Or, it is the only quantity where the price consumers are willing to pay is exactly the price producers are willing to accept

question

market failure

answer

the inability of the free market to allocate resources efficiently

question

market power

answer

the ability to set a price above the perfectly competitive level

question

money demand

answer

the negative relationship between the real interest rate and the quantity of money demanded as an asset plus the quantity of money demanded for transactions

question

money market

answer

the interaction of money demand and money supply determines the "price" of money, the nominal interest rate

question

money multiplier

answer

equal to one over the reserve ratio, this measures the maximum amount of new checking deposits that can be created by a single dollar of excess reserves

question

money supply

answer

the fixed quantity of money in circulation at a given point in time as measured by the central bank

question

monopolistic competition

answer

a market structure characterized by a few small firms producing a differentiated product with easy entry into the market

question

monopoly

answer

a market structure in which one firm is the sole producer of a good with no close substitutes in a market with entry barriers

question

monopsony

answer

a factor market in which there is a sole firm that has market-power, i.e. a wage setter

question

multiplier effect

answer

the idea that a change in any component of aggregate demand creates a larger change in GDP

question

national debt

answer

the accumulation of all annual budget deficits

question

natural monopoly

answer

the case where economies of scale are so extensive that is is less costly for one firm to supply the entire range of demand than for multiple firms to share the market

question

natural rate of unemployment

answer

the unemployment rate associated with full employment, somewhere between 4-5% in the US

question

necessity

answer

a good for which the proportional increase in consumption is less than the proportional increase in income

question

negative externality

answer

the existence of spillover costs upon third parties from the production of a good

question

net exports

answer

the value of a nation's total exports minus total imports

question

net export effect

answer

the process of how expansionary fiscal policy decreases net exports due to rising interest rates. Another form of crowding out.

question

nominal GDP

answer

the value of current production at the current prices

question

nominal interest rate

answer

the interest rate unadjusted for inflation. The opportunity cost of holding money in the money market

question

non-collusive oligopoly

answer

Models of industries in which firms are competitive rivals seeking to gain at the expense of the rivals.

question

nonmarket transactions

answer

household work or do-it-yourself jobs that are missed by GDP accounting

question

non-renewable resources

answer

Natural resources that cannot replenish themselves

question

normal goods

answer

a good for which demand increase with an increase in consumer incom

question

normal profit

answer

the opportunity cost of the entrepreneur's talents. Another way of saying the firm is earning zero economic profit

question

official reserves account

answer

The Fed's adjustment of a deficit or surplus in the current and capital account by the addition or subtraction of foreign currencies so that the balance of payments is zero

question

oligopoly

answer

a very diverse market structure characterized by a small number of interdependent large firms, producing either a standardized or differentiated product in a market with a barrier to entry

question

open market operation (OMO)

answer

a tool of monetary policy, it involves the Fed's buying (or selling) of Treasury bonds from (or to) commercial banks and the general public

question

opportunity cost

answer

the value of the sacrifice made to pursue a course of action

question

peak

answer

the top of the business cycle where an expansion has ended and is about to turn down

question

perfectly elastic

answer

Ed=infinity. In this special case, the demand curve is horizontal meaning consumers have an instantaneous and infinite response to a change in price

question

perfectly inelastic

answer

Ed=0. In this special case, the demand curve is vertical and there is absolutely no response to a change in price.

question

positive externality

answer

The existence of spillover benefits upon third parties from the production of a good.

question

present value

answer

The amount of money needed today, to produce, at a given interest rate, a given amount of money at some time in the future.

question

price ceiling

answer

a legal maximum price, above which the product cannot be sold

question

price discrimination

answer

the sale of the same product to different groups of consumers at different prices

question

price elasticity of demand (ED)

answer

Measures the sensitivity of consumers' quantity demanded for good X when the price of good X changes.

question

price elasticity of supply (ES)

answer

Measures the sensitivity of producers' quantity supplied for good X when the price of good X changes

question

price floor

answer

A legal minimum price, below which the product cannot be sold.

question

price index

answer

A measure of the average level of prices in a market basket for a given year, when compared to the prices in a reference (or base) year.

question

prisoners' dilemma

answer

A game where the two rivals achieve a less desirable outcome because they are unable to coordinate their strategies

question

private goods

answer

Goods that are both rival and excludable

question

producer surplus

answer

The difference between the price received and the marginal cost of producing the good.

question

productive efficiency

answer

Production of maximum output for a given level of technology and resources.

question

production function

answer

The mechanism for combining production resources, with existing technology, into finished goods and services

question

production possibilities

answer

The different quantities of goods that an economy can produce with a given amount of scarce resources

question

production possibilities frontier

answer

the graphical device used to show the production possibilities of two goods

question

production possibility curve

answer

The graphical device that shows the combination of the two goods that a nation can efficiently produce with available resources and technology.

question

productivity

answer

the quantity of output that can be produced per worker in a given amount of time.

question

profit maximizing resource employment

answer

The firm hires a resource up to the point where MRP=MRC.

question

progressive tax

answer

A tax where the proportion of income paid rises as income rises

question

proportional tax

answer

a tax where the proportion of income paid in taxes is constant no matter the level of income

question

protective tariff

answer

An excise tax levied on an imported good that is produced in the domestic market so that it may be protected from foreign competition

question

public goods

answer

goods that are both nonrival and nonexcludable

question

quantity theory of money

answer

The theory that an increase in the money supply will not affect real output and will only result in higher prices

question

quintiles

answer

When you rank household incomes from lowest to highest, each quintile represents twenty percent of all households

question

quota

answer

a maximum amount of a good that can be imported into the domestic market

question

real GDP

answer

the value of current production, but using prices from a fixed point in time

question

real rate of interest

answer

the cost of borrowing to fund an investment and equal to the nominal interest rate minus the expected rate of inflation

question

recession

answer

Two or more consecutive quarters of falling real GDP

question

recessionary GDP

answer

the amount by which dull employment GDP exceeds equilibrium real GDP

question

regressive tax

answer

a tax where the proportion of income decreases as income rises

question

relative prices

answer

the price of one unit of good X measured not in currency, but in the number of units of good Y that must be sacrificed to acquire good X

question

renewable resources

answer

Natural resources that can replenish themselves if they are not overexhausted

question

required reserves

answer

the minimum amount of deposits that must be held at the bank for withdrawals

question

reserve ratio

answer

the fraction of total deposits that must be kept on reserve

question

resources

answer

also called factors of production, these are commonly grouped into the four categories of labor, physical capital, land or natural resources, and entrepreneurial ability

question

revenue tariff

answer

an excise tax levied on goods that are not produced in the domestic market

question

saving function

answer

a positive relationship between disposable income and saving

question

scarcity

answer

the imbalance between limited productive resources and unlimited human wants

question

second-hand sales

answer

FInal goods and services that are resold

question

shortage

answer

a situation which, at the going market price, the quantity demanded exceeds the quantity supplied

question

short run

answer

a period of time too short to change the sixe of the plant, but many other more variable, resources can be adjusted to meet demand

question

specialization

answer

production of goods, or performance of tasks, based upon comparative advantage

question

spending multiplier

answer

the amount by which real GSP changes due to a change in spending

question

spillover benefits

answer

additional benefits to society, not captured by the market demand curve from the production of gold

question

spillover costs

answer

additional costs to society, not captured by the market supply curve from the production of a good

question

stagflation

answer

a situation seen in the macroeconomy when inflation and the unempoyment rate are both increasing. Also called cost-push inflation

question

sticky prices

answer

the case when price levels do not change, especially downward, with chanes in AD

question

stock

answer

a certificate that represents a claim to, or share of, the ownership of a firm

question

subsidy

answer

a government transfer, either to consumer or producers, on the consumption or production of a good

question

substitute goods

answer

two goods are consumer substitutes if they provide essentially the same utility to the consumer

question

substitution effect

answer

the change in quantity demanded resulting from a change in the price of one good relative to the price of other goods

question

supply curve

answer

shows the quantity of a good supplied at all prices

question

supply schedule

answer

a table showing quantity supplied for a good

question

supply shock

answer

an economy-wide phenomenon that affects the cost of firms and results in a shifting AS curve

question

supply-side fiscal policy

answer

Fiscal policy centered on incentives to save and invest to prompt economic growth with very little inflation

question

surplus

answer

a situation in which, at the going market price, the quantity supplied exceeds the quantity demanded

question

tax bracket

answer

a range of income on which a given marginal tax rate is applied

question

tax multiplier

answer

the magnitude of the effect that a change in lump sum taxes has on real GDP

question

technology

answer

a nation's knowledge of how to produce goods in the best possible way

question

theory of liquidity preference

answer

Keynes's theory that the interest rate adjusts to bring the money market into equilibrium

question

Total Cost (TC)

answer

the sum of total fixed and total variable costs at any level of output

question

Total Product of Labor (TPL)

answer

production costs that do not vary with the level of output

question

total revenue

answer

the price of a good multiplied by the quantity of goods sold

question

total revenue test

answer

Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic

question

total utility

answer

the total happiness received from consumption of a number of units of a good

question

Total Variable Costs (TVC)

answer

Production costs that change with the level of output

question

total welfare

answer

the sum of consumer surplus and producer surplus

question

trade-offs

answer

the reality of scarce resources implies that individuals, firms, and governments are constantly faced with difficult choices that involve benefits and costs

question

transaction demand

answer

the amount of money held in order to make transactions

question

trough

answer

the bottom of a cycle where a contraction has stopped and is about to turn up

question

underground economy

answer

the unreported or illegal activity, bartering or informal exchange of cash for goods and services that are not reported in official tabulations of GDP

question

unit elastic demand

answer

Ed=1. The percentage change in price is equal to percentage change in quantity demanded

question

utility

answer

happiness, or benefit, or satisfaction, or enjoyment gained from consumption of goods and services

question

utility maximizing rule

answer

the consumer chooses amounts of goods X and Y, with their limited income, so that the marginal utility per dollar spent is equal for both goods

question

utils

answer

a hypothetical unit of measurement often used to quantify utility, AKA "happy points"

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variable inputs

answer

Production inputs that the firm can adjust in the short run to meet changes in demand for the firm's output

question

velocity of money

answer

the average number of times that a dollar is spent in a year

question

world price

answer

the global equilibrium price of a good when nations engage in trade

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