Macroeconomics topic 1

Consumption goods and services are goods and services that are brough by households EX: -Durable consumption goods: automobiles furniture, appliances. -Non-durable consumption goods: foods/clothing -Consumption services: medical, legal, and entertainment services. Capital Goods -Perchases of plant and machinery by films EX: Cranes, trucks, Machines Government Goods and Services. purchases of goods and services by all levels of government: local, state and federal. EX: national defense, State highway, Schools. Exports- Goods and services produced in the U.S. and Sold Abroad. EX: airplanes produces by boeing in U.S. and sold to swiss air.

Opportunity cost is inherently linked to the problems of scarcity and \"trade-off\". Opportunity cost has 2 Parts. -Explicit cost: monetary cost involved in the decision over the next best alternative. -Implicent cost: value of the next best alternative that we forgo or give, when we make that choice or decision.

Factors of production are owned by households who in turn are paid incomes -Rent is income aid for the use of natural resources. -wages and salaries are income paid for the services of labor. -Interest is income paid for the use of capital. -Profit (or loss) is income earned by an entrepreneur for running a business.

centrally planned economy: this results when government decides what to produce, how to produce, and who receives the goods and services Market economy: this results when the decisions of households and firms determine what is produced, how it is produced and who receives goods and services. mixed economy: an economy in which most economic decisions result from interaction of buyers and sellers in markers but in which the government plays a significant role in the allocation of resources.

In goods/product markets -Firms supply goods and services produced -Households buy goods and services -Households pay firm for the goods and services they buy. In factor/input markets -Households supply factors of production -Firms buy or hire factor of production Firms pay households incomes for the services of factors of production

Microeconomics: -the choice of a household to buy a new car -a firm's choice of what product and how much of it to produce -effect of government regulation on the sale of a new prescription drug. Macroeconomics: -study of total national production and income study of national employment and unemployment study of how government may influence the national economy. EX: slide 26

Positive economics describes what exist and how it works. -a statement of fact Normative economics examines what ought to be -a statement of Opinion.