Principles of Macroeconomics - Test 1

the coordination of wants & desires given the mechanism

• -what to produce
• -how to produce
• -who gets it

don't do it

do it

the benefit you might have gained by choosing the next best alternative

• market
• social
• political

invisible hand

invisible handshake

invisible foot [legal]

economists often disagree with each other and occasionally themselves, but they can all agree: people respond to incentives

"you should give the extra to a food bank"

[if it says should or ought on the test is the answer]

any point on the curve is consider efficient

why the curve can move

impossible

creatable goods should be sold at a similar price

price goes down, quantity demand goes up, other things constant

• income
• price of other goods
• tastes
• expectations
• taxes or subsidies

• price of inputs
• technology
• expectations
• taxes & subsidies

where supply and demand intersect

excess supply surplus

excess demand shortage

smaller countries get more of the gains than larger countries

• recession is when you know someone who lost their job
• depression is when you lost your job

if you have economies of scale you get more gains

compresses wages [all should be paid the same]