100 Economics Terms Flashcards

Key Economics Terms

• Scarcity: Limited availability of resources in society, necessitating choices about their use.
• Economics: The field dedicated to understanding how societies manage and allocate their scarce resources effectively.
• Efficiency: Maximizing output and resource utilization to achieve the best possible outcomes in production.
• Equity: Ensuring fair distribution of economic benefits among society's members.
• Opportunity Cost: The value of the next best alternative that is foregone when making a decision.
• Market Economy: An economic system where resource allocation is determined by decentralized decisions through interactions in various markets.
• Externality: The effect that one individual's actions may have on the welfare of others, either positively or negatively.
• Inflation: The overall increase in prices in the economy over time, reducing purchasing power.
• Phillips Curve: Illustrates the inverse relationship between inflation and unemployment in the short run.
• Business Cycle: The periodic fluctuations in economic activity, characterized by phases of expansion and contraction.
• Circular Flow Diagram: A model representing the economy's flow of goods, services, and money among households and firms.
• Production Possibilities Curve: Graph displaying the potential output combinations of different goods given available resources and technology.
• Microeconomics: Focuses on individual households and firms, exploring their decision-making processes and market interactions.
• Macroeconomics: Examines economy-wide phenomena, such as inflation rates, unemployment statistics, and overall economic growth.
• Positive Statements: Claims about the world that aim to describe facts as they are, without value judgments.
• Normative Statements: Prescriptive claims about how things should be, reflecting opinions or ideals.
• Interdependence: The mutual reliance between economic entities in bilateral or multilateral contexts.
• Specialization: The practice of concentrating on a specific area or task to increase efficiency and productivity.
• Absolute Advantage: Indicates the ability of a producer to produce more of a good with the same resources compared to others.
• Comparative Advantage: Highlights a producer's ability to produce a good at a lower opportunity cost than others, guiding trade decisions.
• Imports: Goods brought into a country from abroad for domestic sale.
• Exports: Goods produced within a country and sold to foreign markets.
• Law of Demand: Suggests that, holding other factors constant, an increase in a good's price will reduce the quantity demanded.
• Normal Good: A type of good for which demand increases as consumer incomes rise.
• Inferior Good: A type of good for which demand decreases as consumer incomes rise.
• Substitutes: Goods for which an increase in the price of one results in increased demand for the other.
• Complements: Goods for which a price rise in one leads to decreased demand for the other.
• Law of Supply: States that, all else being equal, an increase in price leads to an increase in the quantity supplied.
• Equilibrium: The market state where the quantity demanded equals the quantity supplied at a given price level.
• Surplus: Occurs when the quantity supplied exceeds the quantity demanded at a given price.
• Shortage: Happens when the quantity demanded surpasses the quantity supplied at a specific price.
• Adam Smith: Pioneering economist known for introducing concepts of free trade and capitalism in "The Wealth of Nations."
• John Maynard Keynes: Influential economist advocating for government intervention in the economy, significantly impacting economic policy and theory during the Great Depression.