MACROECONOMICS 201, UNIT I LECTURE NOTEs
I. The basic economic problem is unlimited wants and limited resources SCARCITY
A.SCARCITY necessitates choices.
B. All choices involve costs. TRADE OFFS The COST/BENEFIT PRINCIPLE
1. The true cost is the next best
UNIT II MACROECONOMICS AND NATIONAL INCOME ACCOUNTS
The CIRCULAR FLOW of economic activity is subject to VICIOUS CYCLES, and VIRTUOUS
CYCLES that give rise to the BUSINESS CYCLE. Macroeconomics is the study of economic
AGGREGATES and FISCAL and MONETARY P
Macro notes III 2015
Modern industrial economies are highly globalized, massive, and dynamic. Therefore, despite
constantly improving theory, Monetary and Fiscal policy may have unintended consequences and
time lags that make policy less effective than an
IV. International trade and exchange
A. People engage in trade to make themselves better off.
1. Free markets produce the most efficient allocation of resources
for complex systems.
2. People and countries which enjoy lower resource costs of