Macroeconomics Real-Life Applications
Macroeconomics Real-Life Applications Economics 111
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This 2 page Class Notes was uploaded by amber weiss on Monday February 15, 2016. The Class Notes belongs to Economics 111 at Southern Illinois University Edwardsville taught by Mary Anne Pettit in Spring 2016. Since its upload, it has received 15 views. For similar materials see Macroeconomics in Economcs at Southern Illinois University Edwardsville.
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Date Created: 02/15/16
Economics Macroeconomics Real- Life Applications Quiz yourself… - Draw 2 models and clearly explain each… Prices make no sense, Christmas cards are in season, and their prices go up. When fruits and veggies are in seasons, their prices go down. This is so confusing. - Explain to this student. What is the 1 question we started this section with? How is a price determined? Through the interaction between supply and demand So, if the equilibrium price is changing— It must be either supply or demand that is changing Use non-price determinants of supply and demand to determine what could be happening D D S S2 D2 S1 Christmas card example: It could either be a: decrease in supply or a increase in demand Fruits and Veggies example: It could either be a: increase in supply or a decrease in demand Christmas card answer: Price increase and quantity increase Fruits and Veggies answer: price decrease and quantity decrease Application: gas prices hit $4 a gallon in August 2008 - Market (pump) price is increasing - What 2 major shifts can lead in an increase in price - Increase in demand - Decrease in supply Application: government- set prices 1 : price ceilings nd 2 : price supports (floors) Price ceilings: legal price set below equilibrium - Why do this? For the results - Graph - Reasons are political- going to be a level government - Example: rent controls - Control: any type of price “control” or price “cap” is set BELOW equilibrium Impacts of price ceilings 1. Shortages - Formal rationing/queing----- list - Way more at that price, but hard to find 1
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