Econ-102-PSU-Exam
Incentives - ANSWER rewards or penalties for engaging in a particular activity
Economics - ANSWER The study of how people allocate their limited resources to
satisfy their unlimited wants
Resources - ANSWER things used to produce goods and services to satisfy people's
wants
Wants - ANSWER what people would buy if their incomes were unlimited
Microeconomics - ANSWER the study of decision making undertaken by individuals
and by firms
Macroeconomics - ANSWER the study of the behavior of the economy as a whole,
including such economy wide phenomena as changes in unemployment the general
price level, and national income.
Aggregates - ANSWER total amounts or quantities.
Rationality Assumption - ANSWER The assumption that people do not intentionally
make decisions that would leave them worse off
Models or theories - ANSWER Simplified representatives of the real world used as
the basis for predictions or explanations
Ceteris paribus assumption - ANSWER The assumption that nothing changes except
the factor factors being studied
Empirical - ANSWER Relying on real-world data in evaluation the usefulness of a
model
Behavioral Economics - ANSWER An approach to the study of consumer behavior
that emphasizes psychological limitations interfere with rational decision making
Bounded Rationality - ANSWER The hypothesis that people are nearly, but not fully,
rational, sot hat they can't examine every possible choice available to them but
instead use simple rules of thumb to sort among the alternatives that happen to
occur to them
Positive Economics - ANSWER Analysis that is strictly limited to making either purely
descriptive statements or scientific predictions; for example, "If A, then B." A
statement of WHAT IS.
Normative Economics - ANSWER Analysis involving value judgements about
economic policies; relates to whether outcomes are good or bad. A statement of
WHAT OUGHT TO BE.
Incentives - ANSWER rewards or penalties for engaging in a particular activity
Economics - ANSWER The study of how people allocate their limited resources to
satisfy their unlimited wants
Resources - ANSWER things used to produce goods and services to satisfy people's
wants
Wants - ANSWER what people would buy if their incomes were unlimited
Microeconomics - ANSWER the study of decision making undertaken by individuals
and by firms
Macroeconomics - ANSWER the study of the behavior of the economy as a whole,
including such economy wide phenomena as changes in unemployment the general
price level, and national income.
Aggregates - ANSWER total amounts or quantities.
Rationality Assumption - ANSWER The assumption that people do not intentionally
make decisions that would leave them worse off
Models or theories - ANSWER Simplified representatives of the real world used as
the basis for predictions or explanations
Ceteris paribus assumption - ANSWER The assumption that nothing changes except
the factor factors being studied
Empirical - ANSWER Relying on real-world data in evaluation the usefulness of a
model
Behavioral Economics - ANSWER An approach to the study of consumer behavior
that emphasizes psychological limitations interfere with rational decision making
Bounded Rationality - ANSWER The hypothesis that people are nearly, but not fully,
rational, sot hat they can't examine every possible choice available to them but
instead use simple rules of thumb to sort among the alternatives that happen to
occur to them
Positive Economics - ANSWER Analysis that is strictly limited to making either purely
descriptive statements or scientific predictions; for example, "If A, then B." A
statement of WHAT IS.
Normative Economics - ANSWER Analysis involving value judgements about
economic policies; relates to whether outcomes are good or bad. A statement of
WHAT OUGHT TO BE.
