Chapter 2- Economic environment
specialization
People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are shaped, in turn, by interests and talents.
Scaricity
The resources that we value—time, money, labor, tools, land, and raw materials—exist in limited supply. There are simply never enough resources to meet all our needs and desires.
economies of scale
as the level of production increases, the average cost of producing each individual unit declines
Microeconomics
focuses on the actions of individual agents within the economy, like households, workers, and businesses
Fiscal policy
involves government spending and taxes, is determined by a nation's legislative body. For the United States, this is the Congress and the executive branch, which establishes the federal budget.
Macroeconomics
looks at the economy as a whole
In a world of scarcity, we will never:
meet all of society's wants
Monetary policy
policies that affect bank lending, interest rates, and financial capital markets, is conducted by a nation's central bank. For the United States, this is the Federal Reserve.
Economics
the study of how humans make choices under conditions of scarcity.
opportunity cost
what must be given up to obtain something that's desired
In a planned economy, government determines what can be produced and:
what prices will be charged