Economics Ch. 1 Vocabulary

By: Nathan Spell

economics

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

economic perspective

economic way of thinking

marginal analysis

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

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.

theoretical economics

the process of deriving and applying economic theories and principles

principles

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

generalizations

statement of the nature of the relationship between two or more sets of facts

other-things-equal assumption

the assumption that factors other than those being considered are held constant

policy economics

the formulation of courses of action to bring about desired economic outcomes or to prevent undesired occurrences

economic growth

the production of more and better goods and services

the development of a higher standard of living

full employment

the provision of suitable jobs for all citizens who are willing and able to work

economic efficiency

the achievement of the maximum fulfillment of wants using the available productive resources.

price-level stability

avoid large upswings and downswings in the general price level; that is, avoid inflation and deflation

economic freedom

guarantee that businesses, workers, and consumers have a high degree of freedom in their

economic activities.

equitable distribution of income

ensure that no group of citizens faces poverty while most others enjoy abundance

economic security

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

balance of trade

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

tradeoffs

the achievement of a goal at the sacrifice of another

macroeconomics

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

aggregate

a collection of specific economic units treated as if they were one unit

microeconomics

looks at specific economic units

positive economics

the analysis of facts or data to establish scientific generalizations about economic behavior

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

fallacy of composition

the false notion that what is true for the individual (or part) is necessarily true for the group (or whole)

“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

Works Cited-Campbell, Stanley. Economics, 15th 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_ScientificMethod.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