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| that branch of economics that studies the larger aggregates of the econonmy~ umemployment, inflation, economic growth |
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| limited resources, our wants greater than our resources scarity forces to make trade- offs |
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| undertake to do one activity, some other highly valued activity must be given up. The highest or best forgone oppurtunity resulting from one decision |
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| economics assume that individuals act as if they are motivated by ________ and respond in predicatable ways to changing circumstances. |
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| People do the best they can, based on their values and information, under current and anticapted cirrcumstances. |
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| Marginal Analysis Benefit & Cost |
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| comparison of marginal benefits and marginal cost usually for decision making |
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| the desire to buy something ((want)) |
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| the desire to buy something at a particular price |
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| negative or inverse relationship between price and quantity demanded, ceterius paribus |
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| Three reasons why there is an inverse relationship with price and quantity |
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1. law of demand
2. human behavior
3. law of diminishing marginal utility |
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| a shift of the demand curve outward on inward influenced by factors other than price commodities |
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| Change in Quantity Demand |
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| inverse relationship; movemnt along a existing demand curve that is influenced only by the price commodity |
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when drawing a demand curve we hold other factors constant, determinants of demand. What are they? (5) |
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- Taste & Preference
- Income
- Future Expectations
- NUMBER OF BUYERS
- Price of related goods
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| what the sellers make avaliable in the market |
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| what the seller makes avaliable in the market at a particular price |
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| The relationship between price and supply |
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| a horizontal summation of individual supply curves |
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- intersection between market demanded and supplied
- Quantity D = Quantity S
- no surplus or shortage
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| what are the conditions of a market equilibrium |
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| market is at it's most efficent point |
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- equilibrium
- temporary equilbrium
- change in equilbrium
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| what are the states of a market? |
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| a market is in a temporary state of equilbrium because of a ________. Quantity demanded > quantity supplied |
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| quantity demanded < quantity supplied |
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- maintaing employment
- maintaing stable price levels
- achieving high rates of economic growth
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| The goals of macroeconomics (3) |
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- Land
- Labor
- Physical Capital
- Technological Knoweldge
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| The factors of production (4) |
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| how we measure economic growth by anual percentage change in real output of goods and serivces per capita |
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| Growth Domestic Product (GDP) |
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| the market value of all final goods and services provided in a country within a specific period of time, usually one year |
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not yet factored inflation
"GPD in _______ ________" |
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Real GDP
"constant dollar$" |
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| A macroeconomic measure of the value of a nation's total output of goods and services adjusted for price changes (inflation or deflation) |
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| shows how long it will take a nation to douible its output at various growth rate and divide into... |
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- increasing saving rates, investments, & capital stock
- improvements in infrustructue
- improving reseearch & development
- protecting property rights
- engaging in free trade
- increasing educational investment
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| Public Policies (6) that effect growth rate |
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| public policy. saving moe leads to consuming more in the future. Putting your money in the bank so they can lend it to the public |
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| A public policy. Highways, airports, technologies, ports, bridges, powerlines. It will increase productivity. |
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| Improvements in research and development |
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| A public policy. consists of the activities undertaken to create new products and processes that lead to technological progress. |
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| Protecting Private Property |
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| A public policy. Enforced in countires that are not in ownership of land, labor, or capital. Rule of Law- a government ability to protect private property rights. |
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| A public policy. Due to principle of compartive advantage, which suggest that 2 countires or individuals producing different good or service at lower oppurtunity cost can benefit from trading each other. |
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| Increasing Educational Investment |
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| A public policy. Growth as investments in physical capital |
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| general rise in the level of prices of good and services in an economy |
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| Consumer Price Index (CPI) |
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| Measures prices from one year to the next year. Price change for a constant market basket of goods & services from one period to the next in the same level |
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| the percentage increases (in price) over a period of 12 months. |
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| A reduction in inflation. However, an economny experiencing a disinflation may still be experiencing an inflation but at a declining rate |
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| a decline in the overall level of prices in an economy |
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| an extremely high rate of inflation |
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- Demand pull
- cost push
- built in
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| caused by a rise in aggregates deamnd as a result of a rise in private and gov't spending |
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| total demand for the final goods and services produced in a economy gives a period of time |
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| "supply shock inflation" arises when aggregate suppy falls. A fall in potiental output can result from natural disasters, increased prices of inputs, etc. |
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| arises from adaptive expectations that people develop. people form their expectations on the future on the basis of past experiences. linked to "wage price spiral" |
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