ECON 1BB3 Study Guide - Final Guide: Reserve Requirement, Monetary Policy, Unemployment Benefits

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ECON 1BB3 Full Course Notes
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ECON 1BB3 Full Course Notes
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10 principles of economics: people face tradeoffs. Give up one thing to gain another. Guns and butter : the cost of something is what you give up to get it. Opportunity cost: whatever must be given up to obtain some item, rational people think at the margin. Marginal changes: small incremental adjustments to a plan of action. A rational decision maker takes an action if and only if the marginal benefit of the action exceeds the marginal cost: people respond to incentives. The effects of a good"s price on the behaviours of buyers and sellers in a market is crucial for understanding how the economy allocates scarce resources: trade can make everyone better off. By trading with others, people can buy a greater variety of goods and services at a lower cost: markets are usually a good way to organize economic activity.

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