macroeconomicsExam1notes - MACROECONOMICS EXAM 1 scarcity...

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MACROECONOMICS EXAM 1 scarcity is defined as the condition of human wants and needs exceeding production possibilities. In other words, society does not have sufficient productive resources to fulfill those wants and needs. Opportunity cost is the loss of potential gain from the best alternative to any choice. Thus, opportunity cost is the cost of pursuing one choice instead of another. Every action has an opportunity cost. For example, someone who invests $10,000 in a stock denies oneself the interest that one can easily earn by leaving the $10,000 dollars in a bank account instead. In Economics efficiency is a general term encompassing the idea that a system proceeds with the minimum amount of waste. Efficiency is improved if the amount of "waste" or "friction" is reduced. The efficiency of an economy is used to determine how well an economic system serves society . A system can be called economically efficient if No one can be made better off without making someone else worse off. The most output is obtained from a given amount of inputs. Production proceeds at the lowest possible per unit cost. A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both private-owned and state-owned enterprises [1] or that combines elements of capitalism and socialism , or a mix of market economy and planned economy characteristics. [2] A region's gross domestic product , or GDP , is one of the ways of measuring the size of its economy . The GDP of a country is defined as the total market value of all final goods and services produced within a country in a given period of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time. The most common approach to measuring and understanding GDP is the expenditure method: GDP = consumption + gross investment + government spending + ( exports imports ) , or, GDP = C + I + G + (X-M) net exports , sometimes symbolized as NX ) is the difference between the monetary value of exports and imports in an economy over a certain period of time. A
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This note was uploaded on 05/06/2008 for the course ECON 2301 taught by Professor Hudgins during the Spring '08 term at Collin College.

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macroeconomicsExam1notes - MACROECONOMICS EXAM 1 scarcity...

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