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Lecture

Introduction to Macroeconomics

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Department
Economics
Course
CAS EC 102
Professor
Jay Zagorsky
Semester
Spring

Description
07/02/2014 Key Ideas Society has scarce resources The management of society’s resources is important because resources are scarce Scarcity  – means that society has limited resources and therefore cannot produce all the goods and  services people wish to have Economics is the study of how society manages its scarce resources Five Key ideas Incentives: anything that cause people to change their actions Two types: Positive and Negative Positive Incentives: when a person, family or business is rewarded for doing a particular action Negative Incentives: when a particular action results in punishment Ex: grades, pay, traffic circles in India Right incentives improve economic conditions Wrong incentives can destroy a country Money is a big incentive and incentives matter A signal of quality Allow societies to produce far more by eliminating barter A measuring stick Scarcity means that any moment in time needs and desires are greater than available resources Easy to see in poor places (lack of food, water, health care, roads etc.) Also exists in rich countries (time). Because of scarcity, we have to give up something else (called “trade­off”) Understanding the trade­offs involved are an importan
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