Economics Chapter 7

Economies of scale – Occur when the average cost of production falls as the producer grows larger
economic models – a theory or theories or simplified representation that helps predict behavior in the real world
scarcity – n. a situation that exists when there are not enough resources to meet human wants (p. 4)
Net exports – Is the difference between the revenue a country gains from its exports and the country's expenditure that it loses from buying other country's imports
determinants of demand – Consumer income, prices of substitute and complementary goods, consumer tastes and preferences, consumer speculation, and number of buyers in the market all influence demand
Spend – To use money to buy goods and services.
Fiscal policy expansion – Increase government spending, lower taxes
Quantity Demanded – The amount of goods and services consumers are willing to buy
Refer to Figure 11-4. What happens to the average fixed cost of production when the firm increases output from 150 to 200? 
aggregate demand – the amount of goods and services in the economy that will be purchased at all possible price levels
National economies can be split into how many sections? – 2
liabilities – what is owed (debt)
What is the relationship between capital goods and GDP – The more a country invests in capital goods, the higher the GDP will be.
Refer tо Figure 11-4. Whаt hаppens tо the аverage fixed cоst of production when the firm increases output from 150 to 200? 
Which of the following is NOT true about prices?
•If prices are too high, consumers won't buy.
•If prices are too low, businesses will not earn a profit.
•Prices are affected by both supply and demand.
•Setting a price does not require any study by a business. – Setting a price does not require any study by a business.
Concessional Loan – loans that are offered as part of foreign aid, made on concessional terms, i.e. that they are offered on lower interest rates than commercial rates, with longer repayment periods
Stockholder – People who own a share or shares of stock in a corporation
The amount the FED charges banks for loans is known as the… – Discount Rate

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