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    10 Principals of Economics

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    Bành Linh
    This document outlines several key principles of economics: 1. It introduces 10 principles of economics including that people face tradeoffs, markets usually organize economic activity well, and prices rise with too much money printing. 2. It also summarizes macroeconomic goals like full employment and price stability. Tools for achieving these goals include fiscal and monetary policy. 3. Several economic concepts are defined, including demand and supply curves, equilibrium, opportunity cost, and comparative advantage in international trade.

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    10 Principals of Economics

    Uploaded by

    Bành Linh
    29 views3 pages
    This document outlines several key principles of economics: 1. It introduces 10 principles of economics including that people face tradeoffs, markets usually organize economic activity well, and prices rise with too much money printing. 2. It also summarizes macroeconomic goals like full employment and price stability. Tools for achieving these goals include fiscal and monetary policy. 3. Several economic concepts are defined, including demand and supply curves, equilibrium, opportunity cost, and comparative advantage in international trade.

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    This document outlines several key principles of economics: 1. It introduces 10 principles of economics including that people face tradeoffs, markets usually organize economic activity well, and prices rise with too much money printing. 2. It also summarizes macroeconomic goals like full employment and price stability. Tools for achieving these goals include fiscal and monetary policy. 3. Several economic concepts are defined, including demand and supply curves, equilibrium, opportunity cost, and comparative advantage in international trade.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    29 views3 pages

    10 Principals of Economics

    Uploaded by

    Bành Linh
    This document outlines several key principles of economics: 1. It introduces 10 principles of economics including that people face tradeoffs, markets usually organize economic activity well, and prices rise with too much money printing. 2. It also summarizes macroeconomic goals like full employment and price stability. Tools for achieving these goals include fiscal and monetary policy. 3. Several economic concepts are defined, including demand and supply curves, equilibrium, opportunity cost, and comparative advantage in international trade.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    10 Principals of Economics

    1.People face trade off


    2.The cost of something is what you give up to get it
    3.Rational people think at the margin
    4.People respond to incentives
    5.Trade can make everyone better off
    6.Markets are usually a good way to organize economic activity
    7.Governments can sometimes improve market outcomes
    8.A country's standard of living depends on its ability to produce goods and services
    9.Prices rise when the government prints too much money
    10.Society faces a short-run tradeoff between Inflation and unemployment
    Goal of Macroeconomics (managing the economy - policy) - jobs and low prices
    Full Employment
    Stability
    Economic Growth
    Phillips Curve- what does it claim and does it work?
    the relationship between unemployment rate and inflation rate. Works sometimes
    Fiscal Policy (Government spending)
    the means by which a government adjusts its spending levels and tax rates to monitor
    and influence a nation's economy.
    Monetary Policy (changes in the Money Supply)
    An increase in the quantity of money decreases interest rates
    Law of Demand
    other factors being constant (cetris peribus), price and quantity demand of any good
    and service are inversely related to each other. When the price of a product increases,
    the demand for the same product will fall.
    What happens to Quantity Demanded with a change in price?
    A change in quantity demanded is caused by a change in price.(Move on the demand
    curve from point to point)
    What causes Demand shifts?
    Income
    Consumer Preference
    Number of Buyers
    Price of Related Goods
    Expectation of Future
    Law of Supply
    As a price increases the quantity of the good provided increases, as the price of a good
    decreases, the number provided decreases.
    What happens to quantity supplied as price changes?
    A movement along the supply curve. A change in quantity supplied is caused by a
    change in price.
    What causes Supply shifts?
    Production cost
    Technology
    Number of Sellers
    Expectations of the future
    Equilibrium
    quantity supplied equals quantity demanded
    Surplus
    A situation in which quantity supplied is greater than quantity demanded
    Shortages
    The result of quantities demanded exceeding quantities supplied
    Substitute goods
    two goods for which an increase in the price of one leads to an increase in the demand
    for the other
    Complement goods
    two good for which an increase in the price for one leads to a decrease in the demand
    for the other
    Positive analysis
    Answers the question "What is?" or "What will be?"
    Normative analysis
    Analysis concerned with what ought to be
    Opportunity Cost
    is what you sacrifice to get something (your next best alternative) - it may not have a
    money cost
    Microeconomics
    Study of a single factor of an economy - such as individuals, households, businesses, &
    industries - rather than an economy as a whole.
    Macroeconomics
    Concentrates on the operation of a nation's economy as a whole.
    Principle of Voluntary Exchange
    A voluntary exchange between two people makes both people better off.
    COMPARATIVE ADVANTAGE
    THE ABILITY OF ONE PERSON OR NATION TO PRODUCE A GOOD AT A LOWER
    OPPORTUNITY COST THAN
    Import
    A GOOD OR SERVICE PRODUCED IN A FOREIGN COUNTRY AND PURCHASED
    BY RESIDENTS OF THE HOME COUNTY
    Market Economy
    Economic decisions are made by individuals or the open market.
    Scarcity
    the limited nature of resources
    Economics
    Study of how society manages its scarce resources
    Market
    Any time a buyer and seller meet
    Competive market
    a market in which there are many buyers and many sellers so that each has a neglibible
    impact on the market pric
    Normal goods
    Goods for which demand goes up when income is higher and for which demand goes
    down when income is lower.
    Inferior goods
    Goods for which demand tends to fall when income rises.

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