ECON 104 Exam Study Guide – A+ Graded Notes on
GDP, Unemployment, Inflation & Policy
transaction costs - ✔✔the costs of time and information required to carry out a market exchange
Economics - ✔✔The study of how people use their scarce resources to satisfy their unlimited wants
Resources - ✔✔The inputs, or factors of production, used to produce the goods and services that people
want
4 Main Resources - ✔✔Labor, natural resources, capital, entrepreneurial ability
Capital - ✔✔The inputs, or factors of production, used to produce the goods and services that people
want
Natural Resource - ✔✔All gifts of nature used to produce goods and services; includes renewable and
exhaustible resources
Wages - ✔✔Payment to resource owners for their labor
interest - ✔✔Payment to resource owners for the use of their capital
Rent - ✔✔Payment to resource owners for the use of natural resources
Profit - ✔✔reward for entrepreneurial ability; sales revenue minus resource cost
Good - ✔✔A tangible product used to satisfy human wants
service - ✔✔Any activity that fulfills a human want or need and returns money to those who provide it.
, Scarcity - ✔✔occurs when the amount people desire exceeds the amount available at a zero price
Product Market - ✔✔market where goods and services are bought and sold
Resource Market - ✔✔market where resources are bought and sold
rational self-interest - ✔✔each individual tries to maximize the expected benefit achieved with a given
cost or to minimize the expected cost of achieving a given benefit
Marginal - ✔✔additional, Incremental, extra
Economic Fluctuations - ✔✔the rise and fall of economic activity relative to the long-term growth trend
of the economy; also called business cycles
economic theory - ✔✔a simplification of economic reality used to make predictions about the real world
economic model - ✔✔a simplification of reality used to make predictions about cause and effect in the
real world
variable - ✔✔a measure, such as price or quantity, that can take on different values at different times
other-things-constant assumption - ✔✔The assumption, when focusing on the relation among key
economic variables, that other variables remain unchanged; in Latin, ceteris paribus
Hypothesis - ✔✔a theory about how key variables relate
positive economic statement - ✔✔A statement that can be proved or disproved by reference to facts
GDP, Unemployment, Inflation & Policy
transaction costs - ✔✔the costs of time and information required to carry out a market exchange
Economics - ✔✔The study of how people use their scarce resources to satisfy their unlimited wants
Resources - ✔✔The inputs, or factors of production, used to produce the goods and services that people
want
4 Main Resources - ✔✔Labor, natural resources, capital, entrepreneurial ability
Capital - ✔✔The inputs, or factors of production, used to produce the goods and services that people
want
Natural Resource - ✔✔All gifts of nature used to produce goods and services; includes renewable and
exhaustible resources
Wages - ✔✔Payment to resource owners for their labor
interest - ✔✔Payment to resource owners for the use of their capital
Rent - ✔✔Payment to resource owners for the use of natural resources
Profit - ✔✔reward for entrepreneurial ability; sales revenue minus resource cost
Good - ✔✔A tangible product used to satisfy human wants
service - ✔✔Any activity that fulfills a human want or need and returns money to those who provide it.
, Scarcity - ✔✔occurs when the amount people desire exceeds the amount available at a zero price
Product Market - ✔✔market where goods and services are bought and sold
Resource Market - ✔✔market where resources are bought and sold
rational self-interest - ✔✔each individual tries to maximize the expected benefit achieved with a given
cost or to minimize the expected cost of achieving a given benefit
Marginal - ✔✔additional, Incremental, extra
Economic Fluctuations - ✔✔the rise and fall of economic activity relative to the long-term growth trend
of the economy; also called business cycles
economic theory - ✔✔a simplification of economic reality used to make predictions about the real world
economic model - ✔✔a simplification of reality used to make predictions about cause and effect in the
real world
variable - ✔✔a measure, such as price or quantity, that can take on different values at different times
other-things-constant assumption - ✔✔The assumption, when focusing on the relation among key
economic variables, that other variables remain unchanged; in Latin, ceteris paribus
Hypothesis - ✔✔a theory about how key variables relate
positive economic statement - ✔✔A statement that can be proved or disproved by reference to facts
