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Study Guide Exam#1

Study Guide Exam#1 - Study Guide Exam 1 Macroeconomics...

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Study Guide Exam 1 Macroeconomics Definition of Economics Economics is the study of the allocation of our limited resources to satisfy our unlimited wants. Microeconomics vs. Macroeconomics Macroeconomics deals with the economy as a whole, analyzing issues. Microeconomics deals with smaller units within the economy. Both, however, ultimately strive to understand people’s behavior. Scarcity Scarcity---the fact that our wants exceed what our resources can produce. Positive vs. Normative Analysis Positive analysis ( ) focuses on how people actually behave, rather than on how people should behave. It must be testable. Normative analysis ( ) focuses on what should be or what ought to happen; it involves opinions about the desirability of various actions or results. It is not testable. "Greed" video Rational Self Interest (Is "greed" good?) Economists consider individuals to be acting on their rational self-interest if they are striving to do
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