Macro-Economics Chapter 1

Notes:

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Ten Principles of Economics

  1. People face Trade-offs
    • “Guns and Butter example”
  2. The cost of something is what you give up to get something
    • Up to the person/individual; Subjective
  3. Rational People think at the Margin
    • Marginal Benefits to Marginal Costs
  4. People respond to Incentives
  5. Trade can make everyone better off
    • Trade allows each person to specialize in the activities they do best
  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 its ability to Produce 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