Economics Terminology and Concepts, Quizzes of Introduction to Macroeconomics

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Economics

the study of the allocation of our limited resources to satisfy

our unlimited wants

TERM 2

Resources

DEFINITION 2

inputs used to produce goods and services

TERM 3

Scarcity

DEFINITION 3

exists when human wants (material and non-material)

exceed available resources.

TERM 4

The Economic

Problem

DEFINITION 4

Scarcity forces us to choose, and choices are costly because

we must give up other opportunities that we value.

TERM 5

Rational Behavior

DEFINITION 5

people do the best they can, based on their values and

information, under current and anticipated future

circumstances.

Theory

statement or proposition used to explain and predict

behavior in the real world.

TERM 7

Hypothesis

DEFINITION 7

a testable proposition

TERM 8

empirical analysis

DEFINITION 8

the use of data to test a hypothesis

TERM 9

Ceteris Paribus

DEFINITION 9

holding all other things constant

TERM 10

Microeconomics

DEFINITION 10

the study of household and firm behavior and how they

interact in the marketplace

Correlation

when two events occur together

TERM 12

causation

DEFINITION 12

when one event brings about another event

TERM 13

Fallacy of Composition

DEFINITION 13

the incorrect view that what is true for the individual is

always true for the group.

TERM 14

Positive Analysis

DEFINITION 14

an objective, testable statement that describes what

happens and why it happens

TERM 15

Normative Analysis

DEFINITION 15

a subjective, contestable statement that attempts to

describe what should be done

macroeconomics

the study of the whole economy, including the topics of

inflation, unemployment, and economic growth

TERM 17

Aggregate

DEFINITION 17

the total amount--such as the aggregate level of output