CH 1

which of the following is most likely a topic of discussion in macroeconomics?

a decrease in unemployment rate

Specialization

allows workers to focus on the parts of the production process where they have an advantage. Workers who specialize in certain tasks often learn to produce more quickly and with higher quality

which of the following statements most likely lies within the realm of microeconomics?

an increase in labor costs will increase the additional cost of producing another bus

in a market oriented economy the amount of a good that is produced is primarily decided by the interaction of

buyers and sellers

specialization

can lead to an increase in overall production

economic models like the ___ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories

circular flow diagram

in countries like __ the command economy predominates

cuba and north korea

in the first chapter of the wealth of nations, smith introduces the idea of the ___ which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

_____- a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines

economics of scale

which of the following is generally accepted as valid criticism of the production of useful goods & services?

environmental pollution

the circular flow diagram of economic activity is a model of the

flows of goods, services & payments between households and firms

economies of scale

for many goods, as the level of production increases, the average cost of producing each individual unit declines

in the ___ households receive goods & services & pay firms for them

goods & services market

in a command economy the __ either makes most economic decisions itself or at least strongly influences how the decisions are made

government

which of the following best describes a fiscal policy tool?

government spending

which of the following best describes a monetary policy tool?

interest rates

because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea and Canada to take full advantage of specialization

international trade

Economic Theory

is a representation of an object or situation that is simplified while including enough of the key features to help us understand the object or situation.

Market economy

is an economy where economic decisions are decentralized, resources are owned by private individuals, and businesses supply goods and services based on demand

Market

is the interaction between potential buyers and sellers

Traditional economy

is typically an agricultural economy where things are done the same as they have always been done.

in the ___ households work & receive payment from firms

labor market

when nations desire a healthy macroeconomy, they typically focus on three goals: one of them being

low inflation

in a __ most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers & sellers

market-oriented economy

the basic difference between macroeconomics and microeconomics is

microeconomics concentrates on the behavior of individual consumers & firms while macroeconomics focuses on the performance of the entire economy

what does The circular flow diagram show

shows how households and firms interact in the goods and services market, and in the labor market.

vocab division of labor

the way a good or service is produced is divided into a number of tasks that are performed by different workers.

if macroeconomies looks at the economy as a whole, it focuses on which of the following?

unemployed people