Chap 1 Macro – Flashcards
Unlock all answers in this set
Unlock answersquestion
Economics is a social science that involves the study of how individuals choose among alternatives to satisfy their ______, which are what people would buy if their incomes were ________.
answer
wants unlimited
question
______, the study of the decision-making process of individuals (or households) and firms, and ______, the study of the performance of the economy as a whole are the two main branches into which the study of economics are divided.
answer
microeconomics macroeconomics
question
The three basic economic questions ask what and how much will be produced, how will items be produced, and for whom will items be produced. The two opposing answers are provided by the type of economic system with ____ ______ ____ _____ or the _______.
answer
centralized command and control price system
question
In economics we assume that people do not intentionally make decisions that will leave them worse off. This is known as the ______ assumption.
answer
rationality
question
a _______, or _________, uses assumptions and is by nature a simplification of the real world. The usefulness of a _______ can be evaluated by bringing emperical evidence to bear on its predictions
answer
model theory model
question
Most models use the ______ ________ assumption that all other things are held constant or equal.
answer
ceteris paribus
question
_________ economics emphasizes psychological constraints and complexities that potentially interfere with rational decision making. This approach utilizes _____ _______ hypothesis that people are not quite rational, because they cannot study every possible alternative but instead use simple rules of thumb to decide among choices.
answer
behavioral bounded rationality
question
________ economics is value free and relates to statements that can be refutes, such as "if A, then B" _______ economics involves peoples values and typically uses the word should
answer
positive normative
question
incentives
answer
rewards or penitiles for engaging in a particular activity
question
economics
answer
the study of how people allocate their limited resources to satisfy their unlimited wants
question
resources
answer
things used to make a goods or services to satisfy peoples wants
question
wants
answer
what people would buy if their incomes were unlimited
question
microeconomics
answer
the study of decision making undertaken by individuals (or households) and by firms
question
macroeconomics
answer
the study of the behavior of the economy as a whole, including such economy wide phenomena as changes in unemployment, the general price level, and national income
question
aggregates
answer
total amounts or quantities. aggregate demand, for example, is is total planned expenditures throughout a nation
question
economic system
answer
a society institutional mechanism for determining the way which scarce resources are used to satisfy human desires
question
rationally assumption
answer
the assumption that people do not intentionally make decisions that would leave them worse off
question
models v. theories
answer
simplified representations of the real world used as the basis for predictions or explantions
question
ceteris paribus
answer
the assumptions that nothing changes except the factors or factors being studied
question
empirical
answer
relying on real world data in evaluating the usefulness of model
question
behavioral economics
answer
an approach to the study of consumer behavior that emphaize psychological limitations and complications that potentially interfere with rational decision making
question
bounded rationally
answer
the hypothesis that people are nearly, but not fully, rational, so that they cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them
question
positive economics
answer
analysis that is strictly limited to making either purely descriptive statements or scientific predictions: for example, "If A, then B" A statement of what is.
question
normative economics
answer
analysis involving value judgements about economic policies; relates to whether outcomes are good or bad. A statement of what ought to be.
