| A | B |
|---|
 | This graph shows the flow of money and resources through the economy |
 | This model shows the business cycle |
 | This shows the points where supply and demand meet (equilibrium price) |
| Adam Smith | father of economics |
| self-interest | Ppl are motivated by this according to Adam Smith |
| inflation | rise in prices ; makes money worth less |
| unemployment rate | percentage of ppl without work |
| cost-push inflation | when businesses raise their prices to cover costs |
| demand pull inflation | occurs when demand is greater than the supply |
| GDP | gross domestic product |
| Real GDP | GDP that has been adjusted for inflation |
| People's income reflect | choices made on education, skill development, and training |
| human capital | when people improve their knowledge, skills, and training |
| productivity | the output per worker |
| wage or salary | price of labor- paid to workers |
| price ceiling | highest price that can be charged for an item |
| price floor | lowest price that can be charged for an item |
| Price ceilings cause | shortages b/c price is set below equilibrium |
| elasticity | the degree to which consumers respond to price changes |
| the more inelastic the demand | the less ppl will respond to changes in prices |
