Macroeconomics Eco111S

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Oct 28, 2013 (3 years and 10 months ago)

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Macroeconomics

Eco111S

Lecture Notes: Amanda Fitschen

Period 2 and Meridian

Economic Systems


Institutional arrangement: Who owns what and
how is it produced?


Market/Capitalist system


Profit motive in business


Utility (satisfaction) motive in individuals


The market decides and government
´
s role is limited


Command system (socialism/communism)


Central economic planning

Terminology Toolbag

FACTORS OF PRODUCTION



LAND





RENT


LABOUR


WAGES/SALARIES


CAPITAL



INTEREST


ENTREPRENEURSHIP

PROFIT


Terminology Toolbag


Scarcity/choice



Means there is an
opportunity cost
to a
decision


Rational behaviour


Means people make
different choices


Marginalism




Takes account of
benefits/costs

at the
margin



Macroeconomics Versus Microeconomics



Price of a good or a service versus general
level of prices


Perfectly competitive firms versus general
characteristic of the economy


Economic potential of an individual versus
unemployment in an economy


Measurement of economic activity

Three major flows in the economy

The Circular Flow of Goods and
Services

The Circular Flow of Income and
Spending

Financial Institutions in the Circular
Flow of Income and Spending

The Foreign Sector in the Circular Flow
of Income and Spending