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Final

Pre Midterm Macro Final Review.docx

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Department
Economics
Course
CAS EC 102
Professor
Jay Zagorsky
Semester
Spring

Description
Introduction Part IMacroeconomics1Studies market forces beyond the control of any one person family or company 2Management of scarcityaSociety has limited resourcescant produce all the goods and services people wish to haveKey Ideas1IncentivesaAnything that causes people to change their actionsiPositiverewardingiiNegativepunishment 2MoneyaVery big incentivereward bVery powerfuliEliminates bartermore productioniiMust have double coincidence of wants if no money1This is eliminated with moneyiiiLess time to trademore time to producecSignal of quality dUsed as a measuring stickiJobsalary as an indicatoriiLifewealth 3ScarcityaAt any moment in time needs and desiresavailable resourcesbEasily seen in poor placesiLack of roads water health care cRich places tooiMaterial desiresiiOn a different scale than the poorer places but still exists dIntroduces idea of a tradeoffiTo get one thing we give up something else 1Leisure time vs work2Defense spending vs domestic spending4InterconnectionsaEvery economic idea impacts the rest of the economic worldiChoosing to use coffee from Ghana boosts their economy 5Nonzero sum gameaNot just one winner and one loserbMarkets rise and fallwealth is created and lost Important FigureAdam SmithThe Wealth of Nations 17761Individuals want to constantly improve their lives 2Drive by individuals ends up making all of society better offQuestionsAn example of a negative incentive isoFlunking all students who get less thanof the questions rightA key difference between Macro and Micro isoMicro examines 1 individuals actions Macro examine the groupIn a zerosum gameoWinners get their winnings from the losersMexico Citys attempt to ban cars from driving based on their ending license plate number was aincentive that oNegativedid not work Which of the following is not a reason why money is important in MacrooMoney is a signal of quantity Introduction Part IIDefinitions1Goodssomething that can be resold aCar book 2ServicesMakes no sense in reselling the economic transactionaTeeth cleaning car wash 3Positive statementsobjective view of the worldaFactual but not always correctiAtlantic salmon from Chile on packaging 4Normative statementsbased on values and personal judgementshow the world should be aOnes values may or may not correspond to anothers st1 Basic ModelHow Successful Businesses WorkThey consistently make money but not breaking 1Explicit Laws2Implicit Laws3Social Agreements FormulaProfitprice sold x quantity sold x Cost 3 Common Economic Systems1CapitalismaIndividuals own the countrys businesses bOne may buy shares cIncentives to work hard and create businesses 2CommunismaThe entire communitycountry owns all businesses iIndividuals own none bOutput is distributed in very equal mannercNo class struggle 3SocialismaGvmt owns most important businessesiBanks airlines utilities
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