Macroeconomics topic 1

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Identifying consumption goods & services, capital goods (or capital), government goods & services and export goods & services
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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.
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Identifying opportunity cost of a decision given a situation
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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.
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What are the different kinds of income earned by different factors of production
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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.
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Characteristics of centrally planned economy, market economy and mixed economy
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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.
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Roles of firms and households in goods market and factor market (i.e. who is on the demand side and who is on the supply side)
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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
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Identifying microeconomic and macroeconomic statements
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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
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Identifying positive and normative statements
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Positive economics describes what exist and how it works. -a statement of fact Normative economics examines what ought to be -a statement of Opinion.

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