ECN 204 Chapter Notes - Chapter 1: Market Failure, Planned Economy, Better Off
22 Oct 2012
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The more we spend on national defense, the less we can spend on consumer goods: another tradeoff is efficiency vs. equity. Mostly growth in the quantity of money: principle #10: society faces a short-run tradeoff between inflation and. Unemployment and production: business cycle fluctuations in economic activity such as employment, higher level of prices is the primary effect of increasing the quantity of, short-run effects of monetary injections: money. Increasing the amount of money in the economy stimulates the overall level of spending and thus the demand for goods or service. More hiring means lower unemployment: many economies push inflation and unemployment in different directions, policymakers can exploit the short-run tradeoff between inflation and unemployment using various policy instruments, chapter summary, the principles of decision making are: The cost of any action is measured in terms of foregone opportunities. Rational people make decisions by comparing marginal costs and marginal benefits.
