Flashcards – all units

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 330 flashcards in total covering Micro, Macro, International and Development Economics

Development
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Improvements in standards of living of a nation measured by income, education and health

Development
Fixed Costs
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Costs which do not change with the level of output in the short-run. Fixed costs must be paid regardless of the level of output. For example rental payment and interest payments on a bakery remain the same regardless of whether the bakery makes 10 muffins or 10,000 muffins. These costs are fixed.

Fixed Costs
Productivity
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The output per unit of input of a resource. An important determinant of the level of aggregate supply in a nation. Will increase as a result of better or more capital, education and health, all which add to the human capital of a nation.

Productivity
Nominal GDP
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The quantity of various goods produced in a nation times their current prices, added together. Can increase either as a result of an increase in real output or an increase in the price level.

Nominal GDP
National economy
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A macroeconomic term referring to the sum of the economic activity undertaken by a nation’s households and firms in the product and resource market in a year. The circular flow model offers a graphical representation, showing the flow of money and resources in a nation. The aggregate demand / aggregate supply model is another graphical representation, showing the average price level, the level of output and the level of total demand and supply for a nation’s output.

National economy
Money Multiplier
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1/RRR (required reserve ratio). Tells the total amount by which total deposits will increase by in the banking system following an initial change in checkable deposits. For example: an initial injection of $1000 of new money into an economy with a reserve ratio of 0.1 will generate $1000 x (10) = $10,000 in total money.

Money Multiplier
Marginal Private Benefit (MPB)
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The benefits enjoyed by the individual consumers of a particular good. Does not take into account any external benefits or costs arising from a goods consumption.

Marginal Private Benefit (MPB)
Price discrimination
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The practice of a firm charging different prices to different consumers for an identical product. Only possible if the firm can a) segregate the market between consumers with different elasticities of demand, and b) prevent resale of the good.

Price discrimination
Shut-down price
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If the price of a good falls below a firm’s minimum average variable cost, there is no way the firm can hope to cover its labor costs in the short-run, thus the firm must shut down.

Shut-down price
Derived Demand
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When the demand for something depends on the demand for something else. For example the demand for oil depends on the demand for gasoline, which is the finished product that oil is used to produce.

Derived Demand

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