New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Macro Economics Chapter 1 Notes

by: Amy Chapman

Macro Economics Chapter 1 Notes ECO 210

Marketplace > Greenville Technical College > Macro Economics > ECO 210 > Macro Economics Chapter 1 Notes
Amy Chapman


Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes cover Chapter 1 about Foundations and Models.
Prof. Lance Vischer
Class Notes
25 ?




Popular in Macroeconomics

Popular in Macro Economics

This 3 page Class Notes was uploaded by Amy Chapman on Saturday September 10, 2016. The Class Notes belongs to ECO 210 at Greenville Technical College taught by Prof. Lance Vischer in Fall 2016. Since its upload, it has received 6 views. For similar materials see Macroeconomics in Macro Economics at Greenville Technical College.


Reviews for Macro Economics Chapter 1 Notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 09/10/16
Chapter 1 Foundations and Models Scarcity: The situation in which unlimited wants __exceed__ the limited resources available to fulfill those wants. Not freely available or infinite. Everything is Scarce, so we look at relative amounts of scarcity. **Shortage: More people want to buy item at current price more than what is made “Time, the great equalizer” Economics: The study of the __choices__ people make to attain their goals, given their scarce resources. Economic model: A simplified version of __reality___ used to analyze real-world economic situations. **The best model of something is the thing itself Market: A group of __buyers__ and sellers of a good or service and the institution or arrangement by which they come together to __trade__. Throughout this book, as we study how people make choices and interact in markets, we will return to three important ideas: 1 People are __rational__. **Ex. An individual person will not engage in an activity unless the benefits exceed the cost. 2 People respond to economic __incentives__. 3 Optimal decisions are made at the __margin__. **Constantly evaluating. Marginal analysis: Analysis that involves comparing marginal __benefits__ and marginal __costs__. Incentives and Unintended Consequences Trade-off: The idea that because of scarcity, producing __more__ of one good or service means producing __less__ of another good or service. Opportunity cost: The highest-valued __alternative__ that must be __given up__ to engage in an activity. **The one thing you would most prefer to do rather than attend class __Trade-offs__ force society to make choices, particularly when answering the following three fundamental questions: 1 _What______________ goods and services will be produced? 2 _____How__________ will the goods and services be produced? 3 ________Who_______ will receive the goods and services produced? (Central Planned Economy) Government, (Free Market Economy) Interaction of consumers and firms Centrally planned economy: An economy in which the __government__ decides how economic resources will be allocated. **Ex. Communism, Socialism (North Korea, Cuba) Free Market economy: An economy in which the __decisions__ of households and firms interacting in markets __allocate__ economic resources. Mixed economy: An economy in which __most__ economic decisions result from the interaction of buyers and sellers in markets but in which the __government__ plays a significant role in the allocation of resources. Productive efficiency: The situation in which a good or service is produced at the __lowest__ possible cost. Allocative efficiency: A state of the economy in which production is in accordance with consumer __preferences__; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society __equal__ to the marginal cost of producing it. Voluntary exchange: The situation that occurs in markets when both the buyer and seller of a product are made __better off__ by the transaction. Equity: The __fair__ distribution of economic benefits. Often there is a trade-off between efficiency and equity “Generational theft” is economic debt Positive analysis: Analysis concerned with __what is__. (can prove or disprove) Normative analysis: Analysis concerned with what __ought to be__. (opinion) Economics is about __positive__ analysis, which measures the costs and benefits of different courses of action. Because economics studies the actions of individuals, it is a social science. Economics is therefore similar to other social science disciplines, such as psychology, political science, and sociology. As a social science, economics considers human behavior behavior— particularly decision-making behavior—in every context, not just in the context of business . Microeconomics: The study of how __households__ and __firms__make choices, how they interact in markets, and how the government attempts to influence their choices. Macroeconomics: The study of the economy as a __whole__, including topics such as inflation, unemployment, and economic growth. Using Graphs and Formulas


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.