ECON 1100 Lecture Notes - Lecture 6: Traffic Collision, Aggregate Demand, Aggregate Supply
26 Oct 2016
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The whole is greater than the sum (pg 171) Deals with markets- the reaction of buyers and consumers. The price of everything- all goods, all services, worldwide. *look at 6. 1 on page 107 to get a true understanding of the difference. Macro tends to magnify small events so that the whole is greater than the sum of the parts. This event slowed down traffic- the event of this little incident created a larger issue. *paradox of thrift- for an individual to save, it is a good thing. If people save more, others make less income. If people have less income, then they will have less savings. What is good for the individual is not always good for the economy. Fallacy of composition and division - what is good for the individual is not good for the whole. If everyone"s income doubles, the costs will also go up. Some believed that the economy was self-regulating.
