ECO 212- Brief Review of Economics

Economics

The study of how society manages scarce resources

Microeconomics

individuals and firms makes decisions and interact in a market

Macroeconomics

study of the economic wide phenomena, including inflation, unemployment, and economic growth

What are the two areas of economic study

Microeconomics & Macroeconomics

Trade

Makes people better off by engaging in it; Allows specialization based on comparative advantage: David Ricardo

Market

Efficient means of allocating scarce resources; Price information

Demand

Prices & Quantity Demanded

Supply

Prices and Quantity supplied

Income=?

Expenditures

GDP(Gross Domestic Product)

Total Income of everyone in the economy/ Market value of all final goods & services produced within a country in a given period of time

Market Value

goods and services evaluated at market prices

GNP (Gross National Product)

income earned by US

NNP (Net National Product)

GNP depreciation

National Income (NNP)

Indirect business taxes + business subsidies

Personal Income (NI)

retained earnings- corporate business taxes- contributions to social insurance programs (Social Security) + interest income on government debt + government transfers to households

Disposable Income (PI)

personal taxes and other nontax payments to government

C

Consumption 70%; spending by households education included

I

investment 17-18%; structures, equipment, inventors, intellectual prep

G

Government Spending (federal, state, local); transfer payments 2/3

NX

net exports 5%