Lesson 1

Economics is the study of the choices we make in the allocation of scarce _________.
The goal of Social Balance and Equity (Fairness) requires appropriate responsibility to be taken on by all people in the economy including ________________________________.
consumers , business people, and government officials
The statement, “According to a government report, the unemployment rate is at 3%”, is a __________ statement.
positive economic
There _________ which determine(s) how much an individual is able to make during their career and (using “ceteris paribus” based studies) the major variable turns out to be their level of education.
are many variables
Over a reasonable period of time __________ must choose to balance its trade within the global markets in order to prosper.
a nation
Full Employment is the goal seeking the full use of all available workers ______________ .
who are willing and able to work
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_________ Economics is the application of the Principles of Economics to decision making. (choices) by the various arms of the government.
______________ is the goal of economics seeking to allocate resources so that an economy does not experience high inflation.
In the Resource (or Factor) Markets of the Circular Flow model, Households provide __________ to the Business sector in exchange for Wages.
Being “rational” means being able to clearly understand a) what one needs and b) the __________ in gaining the fulfillment of each need
reality of the cost
Microeconomics analyzes how we choose to use our resources on a smaller scale and includes measures of performance such as
business costs and consumer utility patterns
Freedom for citizens is a goal of economics within _____________ .
Critical reasoning in economics considers __________ course(s) of action and the expected results (benefits) relative to the costs of each action
all of the alternative
“Allocation” is concerned with how we choose to use our ________ resources on some variety of different projects
In choosing whether or not to go to a particular concert … if the marginal benefit (marginal utility) gained is less than the marginal cost, then it would be “rational”_________ to the concert.
to not go
the study of the choices, methods or systems used by societies to allocate scarce resources.
exists when we conclude that something that is appropriate for an individual must be also appropriate for society. Example: If it is good for the individual to save more it must be good for the overall economy.
The fallacy of composition
is a study of the allocation of resources relative to the overall national economy or large sectors within it.
Comparing the marginal (extra) costs to the marginal (extra) benefits as an aid to decision making. Example: Is the extra (marginal) benefit of a college degree greater than the marginal cost?
Marginal Analysis
is a study of the allocation of resources in smaller units, specifically the individual consumer and the individual business unit or firm.
The description of the economy where opinion is utilized and value judgments are made.
Example: because of government’s effective use of fiscal policy, unemployment has fallen to only 5.5%.
Normative Economics
Anytime we receive a benefit from use of a resource, it comes at a cost because we could have used that resource for a different opportunity. All of our decisions come at a cost and this cost is compared to the benefit we receive in deciding if we should undertake the action.
Opportunity Cost Analysis
is the application of the principles of economics to government policy actions. Government seeks to understand economic activities in order to influence economic activity.
Policy Economics
The description of an economy by stating facts or using specific data. No opinion is involved.
Example: the unemployment rate is 5.5%
Positive Economics
The study of Economics involves the use of a logical pattern of thinking as well as analytical tools of analysis.
Rational Analysis
Economists consider the variable relationships in their analysis with an emphasis on considering the relationship of one variable at a time. This is called ceteris paribus (Latin translated as meaning one at a time). Each variable is evaluated relative to itself rather than in combination with many other variables.
Variable Analysis
Economics is the study of the _______ that we make in the allocation of scarce resources.
In choosing whether or not to go to a particular concert … if the ___________ the marginal cost, then it would be “rational” to go.
marginal benefit (marginal utility) gained is greater than
A real cost of choosing to attend a concert is not only the out-of-pocket $ $ $ cost, but also the ________________ (lost wages or maybe extra sleep). Every activity we undertake requires us to not pursue other opportunities.
Inflation is when _________ money is paid for the same amount of goods and services than in a previous time period.
In order to evaluate the ________ that must be made toward providing value for people, it is assumed that all parties to the process are rational
The freedom to make purchases as desired and to work and live independent of extensive controls by the government is a basic ____________ in a free market society.
cultural value
Critical reasoning in economics is the ability to analyze the allocation process logically and evaluate the ______________ expected from alternative courses of action.
outcomes (benefits and costs)
Economists emphasize the importance of changing only one variable at a time. This is called _______________ .
ceteris paribus
__________ is concerned with how we choose to use our scarce resources on a limited variety of projects.
The __________ of Economics are the generally accepted theories about resource allocation.