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Macroeconomics
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Economics
The study of how people use their
scarce resources
to satisfy their
unlimited wants
Resources
The
inputs
used to produce the
goods
and
services
that people want
Four Catagories of Resources
-Labor
-Capital
-Natural Resources
-Entrepreneurial Ability
Labor
The physical & mental effort used to produce goods & services. (Time)
Capital
The buildings, equipment, & human skills used to produce goods & services. (Physical vs. Human)
Natural Resources
All "gifts of nature" used to produce goods & service. (Renewable vs. Exhaustible)
Entrepreneurial Ability
Managerial & organizational skills needed to start a firm, combined with the willingness to take the risk of loss or profit.
Markets
the means by which buyers and sellers carry out exchange
Product Market
Where goods and services are bought and sold
Resource Market
where resources are bought and sold
Rational Self-Interest
-Maximize benefit
-Minimize cost
Marginal Analysis
Economists analyze marginal choices, those that are incremental, additional, or extra.
Microeconomics
Studies behavior in particular markets
Macroeconomics
Studies behavior of entire economies
Economic Theory/Model
Simplification of reality used to predict real world cause/effect
Ceteris Paribus
Assumption that other variables remain
unchanged
Positive Economics
What is
Normative
What should be
Fallacy of Association
The incorrect belieft that correlations
equals
causation
Fallacy of Composition
The incorrect belieft that what is true for the
individual
is true for the
group
Secondary Effects
Not taking into account the
unintended consequences
of economic actions/policy
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Author
Anonymous
ID
63511
Card Set
Macroeconomics
Description
Test 1
Updated
2011-02-02T01:28:46Z
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