[ECON 2020] - Midterm Exam Guide - Everything you need to know! (11 pages long)
Document Summary
Perfect information (know what you"re selling and buying) How to address inflation, recession and unemployment. How to predict business cycles and market bubbles. 2) cost of something is what you give up to get it (opportunity cost) 3) rational people think at the margin. 5) trade can make everyone better off. 6) markets are usually a good way to organize economic activity. 7) governments can sometimes improve market outcomes. 8) a country"s standard of living depends on production of goods and services. 9) prices rise when the government prints too much money. 10) society faces a short run trade off between inflation and unemployment. Absolute advantage: who is better at producing overall, who produces more in the least amount of time/cost. Comparable advantage: who is better at producing a certain product. Price of trade must lie between opportunity costs. Specialization and trade, everyone is better off. Spend more time producing what you have a comparable advantage in.
