Economics Concepts

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Circular Flow Diagram

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

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Command Economy

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An economy where economic decisions are passed down from government authority and where the government owns the resources.

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Division of Labor

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The way in which different workers divide required tasks to produce a good or service.

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Economics

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The study of how humans make choices under conditions of scarcity.

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Economies of Scale

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

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Exports

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Products (goods and services) made domestically and sold abroad.

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Fiscal Policy

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Economic policies that involve government spending and taxes.

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Globalization

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

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Goods and Services Market

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

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Gross Domestic Product (GDP)

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Measure of the size of total production in an economy.