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Macroeconomics Complete Course Notes.pdf

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Bridget O' Shaughnessy

Chapter 2 What is more dangerous a gun or a swimming pool 1 Why is economics difficultExpress ideas in economics 1 English language 2 AlgebraEquations 3 DiagramGraphTranslate between each different form of communication Ex When the price of coffee rises people drink less coffee d Q 10023Pcc 2 Economics is a social scienceSocialpeopleScienceuses scientific method natural experiments o Observe o Theorize o Test Theory 3 Microeconomics vs Macroeconomics Micro Individual householdfirms and how they interact Macro Economywide phenomena such as interest rates unemployment money and growth4 Efficiency vs EquityEfficiency is the size of a pieEquity is how the pie is divided 5 Positive vs Normative analysisPositive the world as it is Collect dataevidenceNormative the world as it should bevalue judgementWhy are the principles 67 different in the book compared to lecture6 ModelSimplificationDiagram or equationsAssumptionsVariablesEx Map of a city eliminates certain details to help you find your way 7 Classify variablesReal variables Physical units relative Cups of coffee Cups of coffee per cups of teaNominal variablesPrice of a cup of coffeeStock variables At a point in timeFlow variables Over a period of time add to or take away from stocksExample of a model Circular Flow DiagramChapter 3 Why doesnt Sidney Crosby mow his own lawnProduction Possibility Frontier The combination of outputs that the economy can produce given the available f of production and production technologyFeasible a combination that lies on the PPF or inside the PPFInfeasible a combination that lies above the PPFEfficient In order to get more of one good you must give up some of the other goodShould you and your roommate divide household chores evenly Example 1 There are 2 interior decorators who can paint and wallpaper They have 40 hr work seeks Martha can paint 20 rooms or wallpaper 5 rooms Stewart can paint 10 rooms or wallpaper 8 rooms Martha Stewart p pw wdone in 40 hrsPaint Wallpaper Martha 20 rooms 5 rooms Stewart 10 rooms 8 roomshrs need to do one roomPaint Wallpaper Martha 2 hrs 8 hrs Stewart 4 hrs 5 hrsOpportunity CostWhatever must be given up to obtain some item
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