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19 Cards in this Set

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What does the economic prespective streses?
Resource scarcity & necessity of making choices, assumption of rational behavior, and comparisons of marginal benefit and cost.
Economic Goals
Economic Growth, Full Employment, Economic efficiency, price level stability, economic freedom, equitable distribution of income, economic security, balance of trade
Thoeretical Economics
Involves formulating theories and using them to understand and explain economic behavior & the economy
Policy Economics
Using the theories to fix economic problems or promote economic goals.
Macroeconomics
examines either the economy as a whole or its basic subdivisions, such as household, government, and business
Microeconomics
looks at specific economic units and its details
tradeoffs
to achieve one we must sacrifice another
Positive economics
Focuses on facts and cause and effect relationships (theoretical economics)"What is"
Normative Economics
incorporates value judgements about what the economy should be like or what policies should be recommended ( Policy economics)"What ought to be"
Fallacy of Composition
Assumption that what is true for one person is true for a group of people or the whole.
Economic Policy
State the goals, determine the policy options, and implement and evaluate the policy that was selected.
Generalizations
Economic theories, laws, principles or models
Abstractions
simplifications that omit irrelevant facts and circumstances
Ceteris Paribus
other things-equal assumption. They assume all other variables except those under immediate consideration are held constant.
Direct relationship
(positive relationship) two variables -consumption and income-change in the same direction
Inverse relationship
(Negative relationship) two variables change in opposite directions
Independent variable
Cause or the source
Dependent variable
the effect of the outcome
Y=A+ bx
y= dependent variable
a=vertical intercept
b=slope of the line
x=independent variable