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-23marginal-analysis.gif
-http://www.marketoracle.co.uk/images/economic-stimulus.jpg
-http://www.gelman.gwu.edu/eckles-library/news/free-economics-tutoringnow-available/image
-http://web2.newtownh.schools.nsw.edu.au/Science/CommonFolder/index_files/E1_Scientifi
cMethod.gif
-http://omniideas.com/blog/wpcontent/uploads/2009/04/positive_economic_growth.jpg
-http://sorrel.humboldt.edu/~economic/econ104/marginal/margeff1.gif
-http://s.wsj.net/public/resources/images/EDAG297_angell_20070822173145.gif
-http://www.china-profile.com/data/figures/fig_economic-freedomindex_2008.gif
-http://www.arisgeorgiades.com/slides/tradeoff.jpg