IB Econ - 1.2

5. An idea from Adam Smith suggesting that when individuals act in their own self-interest, they unintentionally benefit society as a whole through market outcomes.
10. A testable idea or prediction that can be examined through evidence or data.
11. The branch of economics concerned with opinions and value-based judgments. It explains what should be.
14. The state in which people are given the same resources, opportunities, or treatment.

1. The branch of economics that deals with objective statements and facts. It explains what is rather than what should be.
2. A statement or opinion based on personal beliefs about what is right, wrong, fair, or unfair, rather than on objective evidence.
3. The additional satisfaction or benefit received from consuming one more unit of a good or service.
4. A simplified representation of reality, often using diagrams, graphs, or equations, to explain how part of the economy works.
6. Fairness in the distribution of economic resources.
7. A system of ideas or principles intended to explain certain economic behaviors or events, usually supported by evidence over time.
8. The satisfaction or benefit a person gains from consuming a good or service.
9. An economic theory developed by John Maynard Keynes, which argues that active government intervention (such as increasing spending or cutting taxes) is necessary during economic downturns to boost demand and reduce unemployment.
12. An economic principle stating that “supply creates its own demand.” It means that producing goods and services will automatically generate enough income to purchase them.
13. paribus assumption A Latin phrase meaning “all other things being equal.” Economists use it to isolate the effect of one variable by assuming everything else stays constant.