DEEcon: Chapter 1

a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market

an economy where economic decisions are passed down from government authority and where resources are owned by the government (ancient Egypt, N Korea)

the way in which the work required to produce a good or service is divided into tasks performed by different workers

the study of how humans make choices under conditions of scarcity

when the average cost of producing each individual unit declines as total output increases

products (goods and services) made domestically and sold abroad

economic policies that involve government spending and taxes

the trend in which buying and selling in markets have increasingly crossed national borders

a market in which firms are sellers of what they produce and households are buyers

measure of the size of total production in an economy ( consumer spending, government spending, Investments, Net Exports - can be negative)

products (goods and services) made abroad and then sold domestically

the market in which households sell their labor as workers to business firms or other employers

the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance.

interaction between potential buyers and sellers; a combination of demand and supply

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