Macroeconomics Week 1 Notes
Macroeconomics Week 1 Notes econ 22061-002
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This 1 page Class Notes was uploaded by Garrett Anderson on Monday February 15, 2016. The Class Notes belongs to econ 22061-002 at Kent State University taught by Dr. Rohlin in Winter 2016. Since its upload, it has received 30 views. For similar materials see Macroeconomics in Economcs at Kent State University.
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Date Created: 02/15/16
Principle #1: Scarcity Scarcity the limited nature of society’s resources. Economics Study of how society manages its scarce resources. Principle #2: OC Opportunity Cost Anything you must give up, in order to obtain something Only the next best thing Principle #6: Markets are usually a good way to organize economic activity. Market economy: allocate resources through decentralized decisions of households & firms. Principle #7: Gov’t can sometimes improve market outcomes. 1. Create & enforce laws Enforce property rights. 2. Markets don’t make it the most efficient. Market Failure: Market fails to allocate resources efficiently. 2 Types: 1) Externality Production or consumption of a good effects bystanders. 2) Market Power Buyer or seller has substantial influence on the price. 3. Markets don’t make it as equitable as we would like. Principle #8: A country’s standard of living depends on its ability to produce goods& services. ProductivityAmount of G&S produced per unit of labor 8 times better standard of living than 100 years ago Principle #9: Prices rise when gov’t prints too much money. Inflation general rise in prices Inflation in Zimbabwe of 11,000% SamMcDonalds making 100k/yr. In one year with 11,000% make 1,100,000,000 Johnrich making 1 mill/yr. Inflation is concern of rich people Principle #10: Society faces a short run tradeoff between inflation & unemployment. Stagflation inflation and unemployment is both high
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