The price of a good measured in units of currency.

Exists if a producer can produce more of a good than all other producers.

The inverse relationship between all spending on domestic output and the average price level of that output. AD measures the sum of consumption spending by households, investment spending by firms, government purchases of goods and services, and the net exports bough by foreign customers.

The sum of all income earned by suppliers of resources in the economy. AI=GDP.

The sum of all spending from four sectors of the economy. GDP = C+I+G+Xn.

The positive relationship between the level of domestic output produced and the avg. price level of that output.

The process of summing the microeconomic activity of households and firms into a more macroeconomic measure of economic activity.

To predict how a change in one variable affects a second, we hold all other variables constant. This is also referred to as the “ceteris paribus” assumption.

Production of the combination of goods and services that provides the most net benefit to society.

When the value of a currency is rising (falling) relative to another currency, it is said to be appreciating (depreciating)