1. Economics Ch. 1 Vocabulary By: Nathan Spell

2. economics  the social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants

3. economic perspective  economic way of thinking

4. marginal analysis  comparisons of marginal benefits and marginal costs (“marginal” means “extra,” “additional,” or “a change in.”)

5. scientific method  the procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws.

6. theoretical economics  the process of deriving and applying economic theories and principles

7. principles  economic principles are statements about economic behavior of the economy that enable prediction of the probable effects of certain actions

8. generalizations  statement of the nature of the relationship between two or more sets of facts

9. other-things-equal assumption  the assumption that factors other than those being considered are held constant

10. policy economics  the formulation of courses of action to bring about desired economic outcomes or to prevent undesired occurrences

11. economic growth  the production of more and better goods and services  the development of a higher standard of living

12. full employment  the provision of suitable jobs for all citizens who are willing and able to work

13. economic efficiency  the achievement of the maximum fulfillment of wants using the available productive resources.

14. price-level stability  avoid large upswings and downswings in the general price level; that is, avoid inflation and deflation

15. economic freedom  guarantee that businesses, workers, and consumers have a high degree of freedom in their  economic activities.

16. equitable distribution of income  ensure that no group of citizens faces poverty while most others enjoy abundance

17. economic security  provide for those who are chronically ill, disabled, laid off, aged, or otherwise unable to earn minimal levels of income

18. balance of trade  seek a reasonable overall balance with the rest of the world in international trade and financial transactions

19. tradeoffs  the achievement of a goal at the sacrifice of another

20. macroeconomics  examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors

21. aggregate  a collection of specific economic units treated as if they were one unit

22. microeconomics  looks at specific economic units

23. positive economics  the analysis of facts or data to establish scientific generalizations about economic behavior

24. normative economics  the part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics

25. fallacy of composition  the false notion that what is true for the individual (or part) is necessarily true for the group (or whole)

26. “after this, therefore because of this,” fallacy  example: rooster crows before the sun rises, but the crow of the rooster doesn’t cause the sun to rise.  In other words, an event isn’t necessarily caused by an event that occurs prior

27. Works Cited -Campbell, Stanley. Economics, 15 th ed. -http://www.daff.gov.au/__data/assets/image/0011/1398017/Fig-23- marginal-analysis.gif -http://www.marketoracle.co.uk/images/economic-stimulus.jpg -http://www.gelman.gwu.edu/eckles-library/news/free-economics-tutoring- now-available/image -http://web2.newtown- h.schools.nsw.edu.au/Science/CommonFolder/index_files/E1_Scientifi cMethod.gif -http://omniideas.com/blog/wp- content/uploads/2009/04/positive_economic_growth.jpg -http://sorrel.humboldt.edu/~economic/econ104/marginal/margeff1.gif -http://s.wsj.net/public/resources/images/ED- AG297_angell_20070822173145.gif -http://www.china-profile.com/data/figures/fig_economic-freedom- index_2008.gif -http://www.arisgeorgiades.com/slides/tradeoff.jpg