ECN 150: Week 1 Notes
ECN 150: Week 1 Notes ECN 150
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This 2 page Class Notes was uploaded by Alexis Ibarra on Saturday January 23, 2016. The Class Notes belongs to ECN 150 at La Salle University taught by Francis Thomas Mallon in Summer 2015. Since its upload, it has received 92 views. For similar materials see Macroeconomics in Economcs at La Salle University.
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Date Created: 01/23/16
WEEK 1 NOTES 1/22/16 Economics How a society takes its limited resources (land, labor, capital, and entrepreneurial ability) and puts them to work in a way that optimizes and best satisfies the insatiable wants and desires of the members of that society. Every society has the same resources (not necessary the same level though). How do societies deploy the resources they have? Socialistic & Communistic Societies: The deployment of the resources will be dictated or commanded by the government. Capitalistic Societies: “Invisible Hand”Adam Smith. This concept was offered which stated that in a capitalistic system, resources will get deployed as if directed by an invisible hand. (As if God was in charge) However, it is the selfish pursuit of profit that dictates how resources will be deployed in that society. It is the system of markets and prices that determines the deployment of resources within that society. The concepts of supply and demand explain the mechanics of how the system of markets and prices functions. Keynesians vs. Classicals Keynesians say that if the economy is under performing, government has a distinct responsibility to correct for that under performance. (It is appropriate and necessary for the government to step in to help drive the economy to the level that it is capable of achieving). Classicals say that if the economy is underperforming, leave it alone. The system of markets and prices will fix it over time. What are these two groups looking at to determine that the economy is underperforming? AKA: What are our economic goals? Jobs > unemployment Full employment is not the same thing as 0 unemployment! If unemployment is high, this says that we are not using our resources in an effective way. (Deployment of labor resources is too low) Value of money Inflation GDP: Gross Domestic Product The dollar value of the final goods and services produced through the use of our domestic resources If Toyota (a Japanese corporation) builds a facility in Ohio, they are using Ohio’s resources, so that is a part of America’s GDP The range of change in GDP is what is significant. The rate of change has to be something that is satisfying and consistent. Growth of 1% is growing, but not satisfiable.
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