2 Econ HW notes - Chapter 2 Econ Homework Notes...

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Chapter 2 Econ Homework Notes Circular-flow diagram: A visual model of the economy that shows how dollars flow through markets around households and firms Production possibilities frontier: A graph that shows the combinations of output that the economy can possible produce given the available factors of production and the available production technology Microeconomics: The study of how households and firms make decisions and how they interact in markets Macroeconomics: The study of economy-wide phenomena, including inflation, unemployment, and economic growth Positive statements: Claims that attempt to describe the world as it is Normative statements: Claims that attempt to prescribe how the world should be 1. The scientific method: Observation, theory, and more observation a. This method can be used in economics in such things as inflation i. Someone can collect data on the increase in prices and increase in printed money and determine if inflation is indeed valid b. The only problem is that economists have to work with what the world
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This note was uploaded on 04/08/2008 for the course ECONOMICS 211 taught by Professor Petitfrere during the Fall '08 term at University of Miami.

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2 Econ HW notes - Chapter 2 Econ Homework Notes...

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