Principles of Macroeconomics Chapter 1-4 terms

the limited nature of society’s resources

the study of how society manages its scarce resources

the property of society getting the most it can from its scarce resources

the property of distributing economic prosperity uniformly among members of society

whatever must be given up to obtain some item

people who systematically and purposefully do the best they can to achieve their objectives

a small incremental adjustment to a plan of action

something that induces a person to act

an economy that allocates resources through decentralized decisions of many firms and households as they interact in markets for goods and services

the ability of an individual to own and excercize control over scarce resources

a situation in which a market left on its own fails to allocate resources efficiently

the impact of one person’s actions on the well-being of a bystander

the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices

the quantity of goods and services produced from each unit of labor input

an increase in the overall level of prices in the economy

fluctuations in economic activity, such as employment and production

dispassionate development and testing of theories about how the world works

highly simplified representation of a more complicated reality

a visual model of the economy, shows how dollars flow through markets among households and firms

the resources the economy uses to produce goods and services including: labor, land, capital

a graph that shows the combinations of 2 goods the economy can possibly produce given the available resources and available technology

the study of how households and firms make decisions and how they interact in markets

the study of economy-wide phenomena including inflation, unemployment and economic growth

attempts to describe how the world should be