Macro exam review 1

Macro exam review 1 - Macroeconomics Study Guide: Exam 1 1....

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Macroeconomics Study Guide: Exam 1 1. What is the basic economic problem? The basic economic problem is the scarcity of productive resources relative to the virtually unlimited demands for goods and services that exist in any society. 2. How can the basic economic problem be solved? It cannot be avoided by individuals, families, or nations. 3. How are resources classified? Productive resources include human and non human resources. Non human or property resources are land and capital; human resources are labor and entrepreneurship. 4. How do we classify the payments to the owners of economic resources? 5. What is the difference between microeconomics and macroeconomics? Microeconomics is the study of individual parts whereas macroeconomics is the study of the overall economy. 6. Distinguish between positive and normative economics. Positive emphasizes “what is,” no value judgments allowed, economic measurement is “positive,” economic theory is positive. Normative emphasizes “what ought to be,” requires value judgments, economic policy is “normative” 7. What is an economic model? Economic models or theories are abstractions from reality and are as simple or complex as is necessary to predict and explain economic behavior. 8. For what purposes are economic models developed? Economic models are developed to see if they accurately predict and explain real world economic. 9. How are economic models tested? Economic models are tested are in the real world where oftentimes “other things” cannot be held equal. They typically cannot be tested through the conduct of controlled experiments as in the case in the natural and physical sciences. 10. What is the basic economic question that every society must answer?
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This note was uploaded on 04/03/2008 for the course ECN 211 taught by Professor Kingston during the Spring '08 term at ASU.

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Macro exam review 1 - Macroeconomics Study Guide: Exam 1 1....

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