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Glossary

  1. Adam Smith: Considered the father of economics, Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations in 1776. It's most often referred to by a shortened title, The Wealth of Nations. He suggested that the economy exists as though orchestrated by an Invisible Hand seeking to answer the three basic questions of economics.
  2. Choice: Decision made or course of action taken when faced with a set of alternatives
  3. Different systems: The different economic systems are: Traditional, Market, and Command. The U.S. is a Mixed economy.
  4. Goods: Tangible objects that satisfy economic wants
  5. International economics: The study of the decisions made in the foreign markets
  6. Macroeconomics: The study of the decisions of government; the name given to a form of economics that focuses on the performance of the economy as a whole, especially the national economy
  7. Marginal Analysis: A decision-making tool for comparing the additional or marginal benefits of a course of action to the additional or marginal costs.
  8. Marginal Benefits: The additional gain from consuming or producing one more unit of a good or service; can be measured in dollars or satisfaction.
  9. Marginal Costs: The increase in a producer's total cost when it increases its output by one unit.
  10. Microeconomics: The study of the decisions of individuals and businesses
  11. Normative Statement: A normative statement is what ought to be, an opinion really. Example: This is the hottest day of the year.
  12. Positive Statement: A positive statement is a fact. Example: The unemployment rate is 4.5%
  13. Scarcity: The condition that exists because human wants exceed the capacity of available resources to satisfy those wants; also a situation in which a resource has more than one valuable use. The problem of scarcity faces all individuals and organizations, including firms and government agencies.
  14. Services: Activities performed by people, firms or government agencies to satisfy economic wants
  15. Three Questions: The three basic economic questions are: What to produce? How to produce? For whom to produce? Different societies answer the three basic questions differently.
  16. TINSTAFL: There Is No Such Thing As A Free Lunch