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Econ 222 Week 1 Notes

by: Megan Ambrose

Econ 222 Week 1 Notes ECON 222

Megan Ambrose
GPA 3.6
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About this Document

These are the notes for classes dated 1/11 and 1/12.
Principles of Macroeconomics
Chandini Sankaran
Class Notes
econ 222, Introduction to Macroeconomics, Dr. Chandini Sankaran




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This 2 page Class Notes was uploaded by Megan Ambrose on Friday January 15, 2016. The Class Notes belongs to ECON 222 at University of South Carolina taught by Chandini Sankaran in Winter 2016. Since its upload, it has received 100 views. For similar materials see Principles of Macroeconomics in Economcs at University of South Carolina.


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Date Created: 01/15/16
  Econ  222     Dr.  Chandini  Sankaran     Week  One     1/11  –  1/15     Economics   • Economics  primary  objective  is  to  examine  problems  and  decisions  from  a   social  rather  than  a  professional  point  of  view   • Economics  trains  you  to  think  in  terms  of  alternatives,  understanding  the   cost  of  individual  and  social  choices,  and  see  how  certain  issues  and  events   are  related       Basic  Principles  of  Macroeconomics   • National  Income   • Growth  &  Productivity   • Savings  &  Investment   • Monetary  System   • Unemployment  /  Inflation   • Consumption  /  Investment   • Government  Monetary  &  Fiscal  Policies     Important  Concepts   • Goods  =  tangible  items   • Services  =  intangible     • Sellers  /  Producers  =  make  income  when  they  produce  and  sell  goods  and   services,  determine  supply  of  goods  and  services   • Consumers  /  Buyers  =  determine  the  demand  of  goods  and  services   • Supply  and  demand  together  determine  the  market  price   • Market  =  place  where  a  good  or  service  is  exchanged   o Doesn’t  have  to  be  a  store,  could  be  a  classroom,  internet,  etc   • When  Demand  increases,  Price  increases.    When  Demand  decreases,  Price   decreases   • When  Supply  increases,  Price  decreases.    When  Supply  decreases,  Price   increases     4  Economic  Principles   1. Land:  encompasses  all  natural  resources  a  company  owns  including  the  land   that  production  takes  place  on,  water,  lumber,  rivers,  cotton,  etc  that  is  used   in  any  step  of  production   2. Labor:    Physical  and  mental  abilities  of  workers,  paid  a  fixed  wage     Ex)  Farmers,  miners,  secretaries   3. Physical  Capital:  Refers  to  goods  produced  in  the  economy  that  are  used  to   produce  other  goods/services   EX)  machines,  tools,  structure,  etc   4. Entrepreneurs:  an  individual  who  organizes  resources  for  production,   sometimes  introduces  new  products  or  new  production  techniques   a. Hallmark  of  an  entrepreneur  is  innovation  and  risk  taking     Econ  222     Dr.  Chandini  Sankaran     Week  One     1/11  –  1/15   b. Reaps  rewards  of  the  company  but  also  suffers  the  losses   c. Can  be  both  an  entrepreneur  and  a  laborer     Economic  Principles     • Inputs  +  Production  Technology  =  Output   • Technology  =  processes  a  firm  uses  for  turning  inputs  into  outputs  of  goods   and  services     Microeconomics  vs.  Macroeconomics     1. Microeconomics:    examines  the  functioning  of  “individual  parts”  of  the   economy  (  Single  product  markets  or  specific  industries)  and  the  behavior  of   “individual  decisions  making  units”  (business  firms,  households,  and   individual  consumers)   a. Ex)  price  of  coke,  price  of  soft  drink  industry,  quantity  of  wheat,   quantity  of  agricultural  products  in  the  U.S.,  Number  of  Ford   employees,  number  of  automobile  employees  in  the  U.S.   2. Macroeconomics:  looks  not  at  any  particular  part  of  the  economy,  but  the   economy  as  a  whole.    We  aggregate  (add  up)  the  micro  counterparts  to  come   up  with  the  overall  picture   a. Gross  Domestic  Product  (GDP):  total  market  value  of  good  and   services  produced  in  a  country.    Measured  quarterly  by  the  Bureau  of   Economic  Analysis  (BEA)  part  of  the  Department  of  Commerce   i. Added  up  by  multiplying  market  price  for  a  particular  output   by  the  quantity  sold.    Do  this  for  every  output  then  ad  up  the   total  values   EX)      Sold  10  Apples  at  $1  each      =  $10                  Sold  100  cars  at  $1000  each  =  $100,000           GDP  =  $100,010     b. Overall  Price  Level:  measured  with  Consumer  Price  Index  (CPI),   measured  monthly  by  Bureau  of  Labor  Statistics  (BLS)  in  department   of  Labor   i. Inflation  =  increase  in  overall  level  of  prices   ii. Deflation  =  decrease  in  overall  level  of  prices     c. Total  Employment  &  Unemployment:  only  accounts  for  able-­‐bodied   workers,  measured  monthly   i. When  GDP  increases  unemployment  decreases  which  creates   and  economic  boom   ii. When  GDP  decreases  unemployment  increases  which  creates  a   recession  


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