Principles of Macroeconomics - Week 1

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TairRee
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284449
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Principles of Macroeconomics - Week 1
Updated:
2014-09-30 02:53:30
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Macroeconomics
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Definitions, and other study notes for Principles of Macroeconomics (ECON1 - De Anza College, Cupertino; Stephen Blohm, Fall 2014)
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  1. Define: Economics
    the study of how people make choices among limited alternatives.
  2. Microeconomics
    the branch of economics that focuses on the choices made by individual decision
  3. Macroeconomics
    the branch of economics that focuses on the impact of choices on the total, or aggregate, level of economic activity
  4. Economic systems primarily face the following
    questions (3)
    • 1.      What get produced?
    • 2.      How shall it be produced?
    • 3.      Who gets it?
  5. Define: Positive Statement
    Fact, or hypothesis
  6. Define: Normative
    Value judgement, or opinion
  7. Define: Economic Model
    A simplified representation of economic reality showing the interrelationships between selected economic variables
  8. Factors of Production (3)
    • 1.      Labor
    • 2.      Capital
    • 3.      Natural Resources
  9. Define: Natural Resources
    Found in nature, with no human involvement; can be used to produce goods and services. (Crude oil, in the ground; etc.)
  10. Define: Capital
    Natural resource that has been produced into something else. (Early weapons, machines in auto shop.)
  11. Define: Labor
    • Raw, unskilled labor.
    • *Human Capital: no longer considered labor after education, training, experience.
  12. Define: Technology
    • Knowledge that can be applied to the production
    • of goods and services
    • · Not necessarily robot/machines; Eli Whitney’s cotton-gin is technology
  13. Define: Entrepreneur
    Seeks to make profits by finding new ways to organize the factors of production
  14. Define: Absolute Advantage
    The ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group
  15. Define: Comparative Advantage
    • The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.
    • Comparative advantage is about relative opportunity cost
  16. Define: Opportunity Cost
    The loss of potential gain from other alternatives when one alternative is chosen.

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