Chapter 2 Macroeconomics
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Circular Flow Diagram
- visual model of the economy that shows how dollars flow through markets among households and firms
- Inner Arrow = flow of inputs and outputs Outer Arrow = flow of dollars
Production Possibbilities Frontier
graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
study of economywide phenomena, including inflation, unemployment, and economic growth
study of how households and firms make decisions and how they interact in markets
- claims that attempt to describe the world as it is
- could use evidence to support claim
claims that attempt to describe how the world should be
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