ECON 2010 Chapter : Ch 1-3
Document Summary
Micro- primary elements of an economy; specific market. Macro- economy as whole: headlines daily news, unemployment. Models are heavily utilized (supply and demand: use of variables. Exogenous variables do not attempt to explain (outside the model: consumer income, grain price, labor rates. Endogenous try to explain and are inside the model: quantity and price. Assume: consumers and suppliers are rational, markets are comprised of many players each maximizing utility, collective markets are comprised of individual markets. Macro is entwined with policy and politics: policy produces winners and losers. Employment, inflation, and growth are key indicator variable in an economy. Macro helps explain why each will behave, and the interplay between them. Cars, home appliances: nondurable goods- last a short time. Food, clothing: services- work done for consumers. Dry cleaning, air travel: investment, spending on factors of production- capital, spending on goods bought for future use, business fixed investment.
