Chapter 1 - inflation Positive economics-the actual...

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Chapter 1 Economics - the study of how people use their limited resources to satisfy unlimited wants. (Another definition) The study of how society chooses to use its scarce resources to produce, exchange and consume goods and services. 3 Fundamental Choices 1. What to produce 2. How to produce 3. For whom to produce Microeconomics - concerned with the behavior of households and business firms and the way in which they interact with each other in the markets Macroeconomics - concerned with the aggregates for the economy as a whole, such as the overall rate of economic growth, the overall rate of unemployment and the overall rate of
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Unformatted text preview: inflation Positive economics-the actual workings of the economy. “If minimum wage is raised, there will be an increase in unemployment among teenagers. Normative economics-deals with “what ought to be”. “It would be immoral for the minimum wage to be anything less that $10”. Economic model-a stylized representation of some aspect of the real economy. It does a good job if it gives us a useful guide to thinking about an economic issue. Ceteris paribus-the Latin phrase that means “all other things equal”....
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