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Introduction to Economics (The principle of economics (People face trade…
Introduction to Economics
The principle of economics
People face trade-off
The cost of something is what you give up to get it
Rational people think at the margin
People respond to incentives
Trade can make everyone better off
Market are usually a good way to organize economic activity
Government can sometimes improve market outcomes
A country's standard of living depends on its ability to produce good and services
Price rises when the government prints too much money
Society faces a short-run trade-off between inflation and unemployment
Economics Models
The Circular-flow Diagram
Firm
Households
Markets for factors of production
Market for good and services
The Production Possibilities Frontier
Efficiency
Trade-off
Opportunity cost
Economics growth
Positive VS Normative Analysis
Positive Statement
Claims that attempt to describe the world as it is
Normative Statement
Claims that attempt to prescribe how the world should be