Absolute advantage- the advantage conferred by the ability to produce more of a good or service with a given amount of time and resource; not the same thing as comparative advantage
Aggregate Output- the economy’s total production of final goods and services for a given time period, usually a year. Real GDP is the numerical measure of aggregate output typically used by economists.
Business Cycle-the short-run alternatives alternation between economic downturns, known as recessions, and economic upturns known as expansions.
Capital- manufactures goods used to make other goods and services
Comparative Advantage- the advantage conferred if the opportunity cost of producing the good or service is lower for another producer
Deflation- a fall in the overall level of prices
Depression- a very deep and prolonged downturn
Economic Aggregates- economic measures that summarize data across different markets for goods, serices, workers, and assets
Economic Growth- an increase in the maximum amount of goods and services an economy can produce
Economics- the study of scarcity and choice
Economy- a system for coordinating a society’s productive and consumptive activities
Employment- the total number of people currently employed for pay in the economy, either full-time or part-time
Entrepreneurship- the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.
Expansions- period of economic upturn in which output an employment are rising; most economic numbers are following their normal upward trend; also referred to as recovery
Gains from trade- An economic principle that states that by dividing tasks and trading, people can get more of what they want through trade then they could if they tried to be self sufficient
Individual Choice- the decision by an individual of what to do, which necessarily involves a decision of what not to do.
Inflation- a rise in the overall level of prices
Labor- the effort of workers
Labor Force- the number of people who are either actively employed for pay or unemployed and actively looking for work; the sum of employment and unemployment
Land- all resources that come from nature; such as minerals, timber, and petroleum
Macroeconomics- the branch of economics that is concerned with the overall ups and downs in the economy
Market Economy- an economy in which decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions.
Microeconomics- the branch of economy that studies how people make decisions and how these decisions interact
Model- a simplified representation of a real situation that is used to better understand real-life situations
Normative Economics- the branch of economics analysis that makes prescriptions about the way the economy should work
Opportunity Cost- the real cost of an item: what you must give up in order to get it
Other Things Equal Assumption- Ruling out