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CU / Economics / ECO 2020 / What is absolute advantage?

What is absolute advantage?

What is absolute advantage?


School: University of Colorado
Department: Economics
Course: Principles of Macroeconomics
Professor: Murat iyugan
Term: Winter 2016
Cost: 50
Name: Study Guide
Description: Definions and Equations that you SHOULD know for the test
Uploaded: 02/29/2016
2 Pages 17 Views 14 Unlocks

Dillon Sawayn (Rating: )

The content was detailed, clear, and very well organized. Will definitely be coming back to Morgan for help in class!


What is absolute advantage?

Opportunity Cost: the cost of what we must give up (usually the cost of the second best alternative) Marginal Cost: The cost of adding another good

Ceteris Paribus: All things equal

Production Possibilities Frontier: Show the value of trade by expressing opportunity cost as slope Absolute Advantage: one is better in absolute terms

Comparative Advantage: One is better in relative terms

Compliments: Increase in price A, decrease supply/demand B

Substitutes: Increase in price A, increase supply/demand B

Normal Good: Income increases so demand increases

Inferior Good: Income increases so demand decreases

Tariff: Imposing a tax on imported goods

Quota: Setting a limit on the number of imports

Depression: a deep and prolonged downturn

Recession: A downturn when output and employment are falling (shorter than depression)

What is a stock variable?

We also discuss several other topics like why was reverse transcription useful for producing artificial insulin?

Expansion: GDP increases

Contraction: GDP decreases

Trade Surplus: exports are greater than imports

Stock Variable: Total amount inside something (wealth, debt)

Flow Variable: amount measured OVER TIME (income, spending) If you want to learn more check out phil hipskind

Positive Analysis: Explains how it is (factual)

Normative Analysis: Explains how it ought to be

Nominal GDP: The sum of all final goods and services produced within an economy over a given period of time  measured in current prices

Real GDP: Sum of all final goods and services produced within an economy over a given period of time measured in  constant prices

Frictional Unemployment: Natural cycle between workers and jobs

Structural Unemployment: Natural cycle with the business cycle: recessions and depressions and such Cyclical Unemployment: Short term



What is Ceteris Paribus?

We also discuss several other topics like chacocle
We also discuss several other topics like sympartic
Don't forget about the age old question of cortina troubles
Don't forget about the age old question of biol 1301

Y: Income/GDP

C: Consumer Spending

G: Government Spending

T: Tax

I: Investment

S: Savings

NX: Net Exports (Exports­Imports)

Y = C + I + G + NX 

Y – T

Y – T ­ C 

T – G

Y – C ­ G

( I – S) + NX = 0

Finding GDP in an open economy

Disposable income

Private Savings

Public Savings

National Savings

National Income Account in Open Economy

GDP Deflator

Consumer Price Index

Labor Force Participation Rate

Unemployment Rate

Cost of inflation

Real inflation Rate

Fisher Equation


Real GDP

Price index New−Priceindex old

Price Index Old∗100

U +E

Adult Population∗100


Labor Force∗100

P( t+1)−P(t)


P(t+1)=D (t )

D (t+1)

P(t )(1+r)

a. i = r + π

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