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What is Economics - Lecture Notes | ECO 105, Study notes of Introduction to Macroeconomics

Chapter 1 Macro Material Type: Notes; Professor: Weinstock; Class: Principles of Economics: Macroeconomics; Subject: Economics; University: Pace University-New York; Term: Fall 2015;

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Chapter 1 Macro
Introduction : What is economics?
Resources-
Human made-capital
Services vs. goods
(Highest paid knowledge jobs)
GDP- measure how big economy is
Inflation-price/goods going up
Disinflation- when goes under 0%
Deflation- prices/goods going down
ECONOMICS- is the science of choice, exploring the choices
made by individuals and organizations
Scarcity- the resources we used to produce goods and
services are limited
Economics- the study of choices when there is scarcity
Factors of production- resources used too produce goods &
service; also known as production inputs or resources.
Natural resources- resources provided by nature and used to
produce goods and services.
Labor- human effort, including both physical & mental effort
people, used to produce goods and services.
Physical capital- the stock of equipment machines,
structures, and infrastructure that is used to produce goods
and services
Human capital- the knowledge and skills acquired by a
worker through education and experience and used to
produce goods and services.
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Chapter 1 Macro

Introduction : What is economics? Resources- Human made-capital Services vs. goods (Highest paid knowledge jobs) GDP- measure how big economy is Inflation-price/goods going up Disinflation- when goes under 0% Deflation- prices/goods going down ECONOMICS - is the science of choice, exploring the choices made by individuals and organizations Scarcity- the resources we used to produce goods and services are limited Economics- the study of choices when there is scarcity Factors of production- resources used too produce goods & service; also known as production inputs or resources. Natural resources- resources provided by nature and used to produce goods and services. Labor- human effort, including both physical & mental effort people, used to produce goods and services. Physical capital- the stock of equipment machines, structures, and infrastructure that is used to produce goods and services Human capital- the knowledge and skills acquired by a worker through education and experience and used to produce goods and services.

Entrepreneurship- the effort used to coordinate the factors of production-natural resources, labor, physical capital, and human capital- to produce & sell products. Positive vs. Normative Analysis Positive analysis- “what is?” or “what will be?" Normative analysis- “what ought to be?" 3 economic questions What? How? Who? The choices made by individuals, firms, and government answer 3 questions

  1. What products do we produce?
  2. How do we produce the products?
  3. Who consumes the products? Economic Model Economic model- a simplified representation of an economic environment, often employing a graph. Use assumptions to simplify *Economists use assumptions to make things simpler & focus attention on what really matters Isolate variables- CETERIS PARABIS (everything else held constant) *Economist’s analysis often involves variables & how they affect one another Variable- A measure of something that take on different values Think at the margin ***** How will a small change in one variable affect another