MacroChapter1 - CameronHorton Macroeconomics Chapter1...

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Cameron Horton Macroeconomics Chapter 1 Discussion Questions 1. Inflation and unemployment are a trade off and many economic policies push them in  opposite directions. Changes in demand influence the combination of inflation and  unemployment that the economy experiences in the short run.  2. Because many policies change the cost or benefit that people face and therefore alter their  behavior.  3. Inflation is the increase in the overall level of prices in the economy. It is caused by the  growth in the quantity of money, when the government creates large amounts of the nation’s  money the value of the money falls.  4. Because many different countries have different products. If we have apples and another  country has oranges, we can trade and we are helping each other out. They want some of our  goods and we want some of theirs. 5. Externality is the impact of one person’s actions on the well being of a bystander. The classic 
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MacroChapter1 - CameronHorton Macroeconomics Chapter1...

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