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Unformatted text preview: Variable a measure of something that can take on different values Ceteris paribus to hold other variables fixed Marginal change a small, one-unit change Four main elements to the economic way of thinking 1) Use assumptions to simplify 2) Isolate variables 3) Think at the margin 4) Rational people respond to incentives Macroeconomics the study of the nations economy as a whole Reasons to study Macroeconomics 1) To understand why economies grow 2) To understand economic fluctuations 3) To make informed business decisions Microeconomics the study of the choices made by households, firms, and government and how these choices affect the markets for goods and services Reasons to study Microeconomics 1) To understand markets and predict changes 2) To make personal and managerial decisions 3) To evaluate public policies...
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- Fall '10