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Lu1:introduction (10 principle (trade can make everyone better off, market…
Lu1:introduction
10 principle
trade can make everyone better off
market are usually a good why to organize economic activity
people respon to incentives
governments can sometimes improve market outcomes
rational people think the margin
a country' standard of living depends on its ability to produce goods and services
the cost of something opportunity is what you give up to get it
prices rise when the government prints to much money
people trade-off
society faces a short-run trade off between inflation and unemployment
economic models
the production possibilities frontier
is a graph that shows the combinations of output that the economy can possible produce given that the available factors of production and the available production technology
the circular flow diagram
the circular-flow diagram is a visual model of the economy that shows how dollars flow through markets among households and firm
positive versus normative analysis
positive statements
statement that are attempt to describe the world as it is
normative statements
statement about how the world should be