VWL 1, FFHS, Semester 3

a (still-notcomplete) EU-wide market throughout which labour, capital, goods and services can move freely

 government benefits that supplement the incomes of the needy

 a period of falling output and rising prices

a claim to partial ownership in a firm

 an item that people can use to transfer purchasing power from the present to the future

the organized withdrawal of labour from a firm by a union

unemployment that results because the number of jobs available in some labour markets is insufficient to provide a job for everyone who wants one

two goods for which an increase in the price of one leads to an increase in the demand for the other

 the change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution

a cost that has already been committed and cannot be recovered

a graph of the relationship between the price of a good and the quantity supplied

a table that shows the relationship between the price of a good and the quantity supplied

an event that directly alters firms’ costs and prices, shifting the economy’s aggregate supply curve and thus the Phillips curve

a situation in which quantity supplied is greater than quantity demanded

 a tax on goods produced abroad and sold domestically

the manner in which the burden of a tax is shared among participants in a market

 society’s understanding of the best ways to produce goods and services

Keynes’s theory that the interest rate adjusts to bring money supply and money demand into balance

the market value of the inputs a firm uses in production

 the amount a firm receives for the sale of its output

 the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

the value of a nation’s exports minus the value of its imports; also called net exports

 an excess of imports over exports

 a government policy that directly influences the quantity of goods and services that a country imports or exports

an excess of exports over imports

a parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole

the costs that parties incur in the process of agreeing and following through on a bargain

a government programme that partially protects workers’ incomes when they become unemployed

the percentage of the labour force that is unemployed

a worker association that bargains with employers over wages and working conditions

the yardstick people use to post prices and record debts

the political philosophy according to which the government should choose policies to maximize the total utility of everyone in society

a measure of happiness or satisfaction

the marginal product of an input times the price of the output