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Econ 2133 Macroeconomics Chp 1

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by: Henry Notetaker

Econ 2133 Macroeconomics Chp 1 ECON 2133

Marketplace > East Carolina University > Economcs > ECON 2133 > Econ 2133 Macroeconomics Chp 1
Henry Notetaker
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These notes cover the first chapter of the "Principles of Macroeconomics" Textbook by Lee Coppock and Dirk Mateer
Nehad Elsawaf
Class Notes
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This 2 page Class Notes was uploaded by Henry Notetaker on Friday February 5, 2016. The Class Notes belongs to ECON 2133 at East Carolina University taught by Nehad Elsawaf in Spring 2016. Since its upload, it has received 47 views. For similar materials see Macroeconomics in Economcs at East Carolina University.


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You're awesome! I'll be using your notes for sure moving forward :D

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Date Created: 02/05/16
Chapter 1: Five Foundations of Economics 1)What is Economics? a)Economics: The study of how people allocate their limited (scarce) resources to satisfy their nearly unlimited wants. b)Scarcity: Societies limited resources given its unlimited wants. 2)Micro- & Macroeconomics a)Microeconomics: The study of the individual units that make up the economy. b)Macroeconomics: The study of the overall aspects and workings of an economy. i) Unemployment/GDP 3)Five Foundations of Economics a)Incentives i) Incentives: Are factors that motivate a person to act or exert effort. (1) Positive incentives: Are those that encourage action. (a) i.e. end of the year bonus at work (2) Negative incentives: Also encourage action but by using “a threat”. (a) The idea of getting a speeding ticket keeps motorists from driving too fast. (3) Direct Incentive: Encourage action directly. (a) “If you cut my grass I’ll give you $30” (4) Indirect Incentive: Encourage one action by messing with something else. (a) Gas prices go down; more people drive. b)Trade-Off’s i) Trade offs: Efficiency vs. Equity (1) Many people face trade offs everyday. (a) Take the bus, or drive your car (b) Study more or go out on the town c) Opportunity Costs i) Opportunity Costs: The highest valued alternative that must be sacrificed in order to get something else. (1) “Could I have made more profit doing something else?” d)Marginal Thinking (Thinking at the Margin) i) Economic Thinking: Requires a purposeful evaluation of the available opportunities to make the best decision possible. (1) i.e.: working/school time= either make more/study less or make less and study more. (a) Situations like that and those like it come down to preference on which will be most profitable to you. Either making more money or making better grades. ii)Marginal Thinking: Requires decision makers to evaluate whether the monetary benefit of one more unit of something is greater than the cost of producing it. e)Trade i) Markets: Bring buyers and sellers together to exchange like goods and services between them. ii)Trade: The voluntary exchange of goods/services between two or more parties. iiComparative Advantage: The situation where an individual, business, or country can produce at lower opportunity costs than a competitor can.


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