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$100 $200 $300 $400 $500 Graphs Unit 1 Unit 2 Unit 3 Random Key Terms

C1-$100 - $100 Scarcity The basic economic problem that arises because people have unlimited wants but resources are limited.

C1-$200 - $200 Incentive A cost or benefit that motivates a decision or action by consumers, businesses, or other participants in the economy.

C1-$300 - $300 Marginal Cost The change in total cost that comes from making or producing one additional item.

C1-$400 - $400 C+I+G+Xn (consumers + investment + govt spending + net exports- net imports) Formula for GDP

C1-$500 - $500 Unemployment that occurs when people take time to find a job. Frictional Unemployment

C2-$100 - $100 PPC Curve

C2-$200 - $200 Demand and Supply

C2-$300 - $300 Business Cycle

C2-$400 - $400 Investment Demand

C2-$500 - $500 Laffer Curve

C3-$100 - $100 True or False Changes in price shift the curve? False

C3-$200 - $200 Production Possibilities Curve (PPC) Shows the tradeoffs that are made in producing only two goods. More of one good means that less of a second good is produced.

C3-$300 - $300 Law of Demand As the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.

C3-$400 - $400 What causes a shift in demand? Taste and preferences Number of consumers Price of related goods Income Future Expectations

C3-$500 What is theoretical economics? When economists use the scientific method to make generalizations and abstractions to develop theories. $500

C4-$100 - $100 What is Inflation? The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

C $200 What is the best way to measure a nation’s standard of living? Real GDP per capita (per person)

C3-$300 - $300 Why do some nation’s have higher GDP’s? 1.Availability & quality of natural resources 2.Availability of capital 3.Economic System

C3-$400 - $400 What are the 3 major goals of an economy? 1.Promote economic growth 2.Prevent unemployment 3.Keep prices stable (limit inflation)

C3-$500 - $500 What isn’t included in GDP? 1.Intermediate Goods 2.Nonproduction Transactions 3.Government Spending 4.Net Exports

C4-$100 - $100 What is Aggregate Demand? The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.

C4-$200 - $200 What does, “Change in Consumption/ Change in Income”, show? The Multiplier Effect (MPC)

C4-$300 - $300 How do you shift Aggregate Demand? 1.Change in Consumer Spending 2.Change in Investment Spending 3.Change in Government Spending 4.Change in Net Export Spending

C4-$400 - $400 If prices were to fall, the cost of resources must fall or firms would go out of business. The Ratchet Effect

C4-$500 - $500 What are 4 non-income determinants of consumption & savings. 1.Wealth 2.Expectations 3.Taxations 4.Household Debt

C4-$100 - $100 Opportunity Cost The cost of the next best use of time and money when choosing to do one thing or another.

C4-$200 - $200 Money Market

C4-$300 - $300 What is the study of choices? Economics

C4-$400 - $400 What are 3 causes of inflation? 1.The govt. prints too much money 2.Rising labor costs 3.Rising imported raw materials costs

C4-$500 - $500 What is Keynesian Economics? An economic theory of total spending in the economy and its effects on output and inflation.