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clicker questions - - What should not be done to deal with...

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- What should not be done to deal with the possible double- dip recession- Raise taxes - Determines exchange rate- supply/ demand Why no free lunch? Everything has an opportunity cost Free market: capitalism: market, price, competition, invisible hand theory (a competitive market leads to an efficient optimal economy), laissez fair (government should stay out) Free markets efficient but not equitable Positive economics- science, how things work Capital- productive equipment/ inventories Rent control- leads to shortage Demand increase entire demand curve shifts right What determines: supply- cost of manufacturing Demand: taste- price of substances Most efficient way to run economy- free market - Prices send information - Incentives Invisible hand: free market capitalism is efficient Higher price of battery, lower flashlight sales Demand and supply both decrease equilibrium quantity falls Movement along supply curve – change in price (AKA change in demand) Aggregate Demand = Consumption + Investment + Government spending + Exports – Imports Aggregate_Demand= C + I + G + Y M Investment- buying machines
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This note was uploaded on 05/05/2011 for the course ECON 103 taught by Professor Lin during the Spring '08 term at Rutgers.

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clicker questions - - What should not be done to deal with...

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