AP Macro UI q1

economics

decision making, study of incentive, common sense

scarcity

can’t always get what you want because there’s a limit on EVERYTHING including time

micro vs. macro

study of individual people or business vs. decisions of countries and govs

Resources/ factors of production

land (location and what’s found there),

labor (human productivity/skill),

capital(utility & materials used productively), entrepreneurship (value of goods/services)

specialization

division of labor and specialization over self-sufficiency because it is more efficient

first principals

\-we face tradeoffs daily (efficiency goes up then equitability goes down, guns v. butter)

\-opportunity cost (the next best alternative/ what you give up)

\-we always behave rationally (cost/benefit, adverting with repetition)

second principal set

\-incentives through taxes (demand goes up before placed)

(Public transportation/electric car)

\-trade makes everyone better (specialization and variety)

\-markets organize economy (market-→ market(people), command(central authority), traditional (culture), mixed)

third principal set

\-governments can improve markets

\-a county’s SOL depends on production ability(goods v. services, standard of living, productivity)

\-INFLATION

\-inflation v. short unemployment (decreasing unemployment should end up causing inflation, Phillip’s curve is the tradeoff between the two or inversly related, business curve)