Unit 1 - Jan 8

Macroeconomics- The study of the major component of the economy.

Ex.) Inflation, GDP, unemployment, supply & demand.

Microeconomics-  The study of how households and firms make decisions and they interact in market.

          Ex.) Supply & demand and market structure.

Positive vs. Normative

• Positive- attempt to describe the world as it is (Fact). 
• Ex.) Minimum wage causes unemployment.
• Normative- attempt to prescribe how the world should be.
• Ex.) Government should raise money....

Wants vs. Needs

• Wants- desire of citizens.Broader than our need.
• Needs- basic requirement for living.

Scarcity vs. Shortage

• Scarcity- most fundamental economic problems that all society faces. Satisfy unlimited wants with limited supplies.
• Shortage- situation in which quality demand is greater than quality supplied.

Goods vs. Services

• Goods- tangible commodity.
• Consumer goods- intended for final use by consumers.
• Capital goods- items used in the creation of other goods (Machinery).
• Services- work that is performed for someone else.