# McConnell Brue Macroeconomics 16th ed- Chapter 1

## Terms

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- Economics
- The social science concerned with teh efficient use of scarce resources to achieve the maximum satisfaction of economic wants.
- Economic Perspective
- Stresses resource scarcity, the necessity of making choices, the assumption of rational behavior, comparisons of marginal benefit and marginal cost.
- Utility
- pleasusre, happiness or satisfaction.
- Marginal Analysis
- comparing additional benefits and additional costs.
- Scientific Method
- Method used to draw conclusions, probabilities, models etc.
- theoretical economics
- systematically arrange facts, interpret and generalize them. Put them into cause and effect order.
- principles
- statmes about economic behavior or the economy that enable prediction of the probably effects.
- generalizations
- economic theories, laws, and principles, are often imprecise; expressed as typical tendencies.
- policy economics
- recognizes that theories and data can be used to formulate policies.
- how to find the slope of a curve
- measure the slope at a particular point on the line and solve for the slope of the corresponding tangent line.
- graph
- a visual representation of the relationship between two variables.
- horizontal axis normally represents this variable
- independent variable
- vertical axis normally represents this variable
- dependent variable
- direct relationship (positive relationship)
- two variable (x,y) change in the same direction. IE(x increases and y increases or x deacreases and y decreases) This can be identified by an upward sloping line. (line: from bottom left to top right)
- inverse relationship (negative relationship)
- two variables (x,y) change in opposite directions; IE(x increases and y decreases or x decreases and y increases). This can be identified by an downward sloping line. (line: from top left to bottom right)
- Other-Things-Equal Assumption (Ceteris Paribus)
- The assumption that other factors will be constant or unchanged.
- How to find the slope of a straight line.
- It is the ratio of vertical change to horizontal change or Rise over Run.
- Positive slope
- It is indicated by positive numbers and a positive linear relationship.
- Negative slope
- It is indicated by negative numbers and a negative linear relationship.
- Vertical Intercept
- The point where the line meets the vertical axis.
- Equation of a Linear Relationship
- y = mx + b or y = a + bx. Where y = dependent variable; x = independent variable; mx/bx = slope multiplied by x. + a/b = the vertical intercept.
- tradeoffs
- to achieve one we must sacrifice the other.
- Macroeconomics
- Examines the economy as a whole or its basic subdivisions or aggregates.
- Microeconomics
- Looks at specific economic units. Individual industry, firm, household, etc.
- positive economics
- focuses on facts and cause and effect relationships.
- normative economics
- incorporates value judgements as to the ideal economy.
- fallacy of consumption
- What is true for one individual is true for the whole.
- post hoc fallacy
- reasoning where, after x, or therefore because of x. Event A, although it precedes event B is not necessarily the cause of B.
- aggregate
- A collection of specific economic units treated as if they were one unit.
- economizing problem
- Society's wantes versus economic resources.
- scarce resources
- The limited quantities of land, labor, capital and entreprenureial ability.