EC140 Lecture Notes - Lecture 1: Gdp Deflator
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EC140 Full Course Notes
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Document Summary
Microeconomics the study of the decision of individuals, households and firms, and how they interact in an economy. Macroeconomics the study of aggregated economic outcomes such as inflation, unemployment or economic growth. Scarcity the limited nature of society"s resources. Economics the study of how society manages scarce resources. Fiscal policy tax rates, government spending, trade policy. Monetary policy interest rates, inflation, exchange rates. Core features of a macroeconomic model: encompasses as mush economic activity as possible. Need to understand impact of gaps in the model: accommodates feedback loops - spending decisions affect income, which also affects spending. Macroeconomics analyzes general equilibrium concepts: generates useful economic predictions of critical issues (ex. unemployment, generates economic predictions that correspond to empirical evidence. Variables affected by factors within the model. Abstraction is necessary to understand economic effects. Value of a model is capacity to predict. Positive statement statements that could be judged correct or incorrect.