Macroeconomics

Macroeconomics - 1/9/2008 9:52:00 AM Chapter 2: Trade-Offs,...

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09/01/2008 08:52:00 Chapter 2: Trade-Offs, Comparative Advantage, and the Market System Productions possibilities curve o Figure 2-2 o Assumptions Fully employed Resources and technology are fixed o As long as the combination is on the curve it is efficient o Being inside the curve Underutilized Not producing up to your potential o Economic Growth Outward shift of the curve Due to the economy growing Increasing marginal opportunity cost o Efficiently shift resources Tanks  Market o Buyers and sellers coming together Product markets o Markets for goods such as computers and services such as medical  treatments
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Factor markets o Markets for the factors of production such as labor, capital, and natural  resources Free Market o A market with few government restrictions on how a good or service  can be produced or sold, or on how a factor of production can be  employed 8 Characteristics a Good Economy o Legal and Political Stability o Well-enforced laws Contracts Rule of Law The law is known by all the citizens and it doesn’t change  very often and it is applied to all citizens o Property Rights if you buy something you are going to own it o Tax Laws That encourage everyone to work, save, invest, innovate, and  take risks Let them keep more of what they make o Well-developed financial markets o Sound money Absence of inflation o Infrastructure Catch-all o Free Trade
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Chapter 13 09/01/2008 08:52:00 Money, Banks, and the Federal Reserve System
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Money o Anything people are willing to accept in exchange for goods and  services or payments of debt Barter o Double coincidence of wants Federal Reserve is put in place 1913 o Paper money system o Elastic currency Functions of Money o Medium of exchange o Unit of account Keep your books in terms of money o Standard of deferred payment Federal Reserve System o Every economy has a central bank Central bank is in charge of monetary policy o Feds are in charge of how much money to make available o Moved up from .85= 1 Euro to 1.50= 1 Euro o Most increase the supply of money for short term boost, ultimately  leads to inflation o Formed in 1913  o In 1907 banks failed and no one could get there money
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Changed peoples attitudes on Federal Reserve o The system was supposed to help if a bank got in trouble and had  made good loans, the bank would sell the Feds their loans  (discounting) o Loans from banks to feds are called discount loans o 1929- 1933 A bunch of people to scared and wanted their money, but  the banks didn’t have it the Feds didn’t do anything 
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This note was uploaded on 04/18/2008 for the course SOP 3004 taught by Professor Rich during the Spring '08 term at UNF.

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Macroeconomics - 1/9/2008 9:52:00 AM Chapter 2: Trade-Offs,...

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