Macroeconomics

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Macroeconomics BV/MCC Shared Class Using
Economics McEachern
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The MACROECONOMIC Problem

• Unlimited wants and unlimited resources
• Resources
• Land- All Natural resources physical land
• Labor- the physical and mental effort to produce
  goods and services
• Capital-Buildings, equipment, and human skill
  used to produce goods and services
• Entrepreneurial Ability- Managerial and
  Organizational skills, and the willingness to
  take risks.

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Payments for Resources

• Wages- payment resource owners receive for their
  labor
• Interest- payment resource owners receive for use
  of their capital
• Rent- payment resource owners receive for the use
  of their land and resources
• Profit- payment resource owners get for their
  entrepreneurial ability (Sales Total Costs)

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Terms

• Goods tangible item used to satisfy a human
  want
• Services- an activity that is used to satisfy
  human wants (intangible)
• Goods and Services are thought of as scarce
  resources
• Product Markets- buyers and sellers exchange at
  mutually agreeable terms
• Resource Markets- market in which resources are
  bought and sold

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More Terms

• Macroeconomics- Study of the economy as a whole
• Microeconomics- Study of individual firms
• Assumptions
• Economic actors act in their own self interest
• Choice and exchange require time and information
• People act both (either) on reality and
  expectation

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Faulty Analysis

• Association in not Causation
• If two variables are associated, then one causes
  the other
• Fallacy of Composition-
• What is true for the individual is NOT true for
  the group as a whole
• Mistake of Ignoring Secondary Effects
• Ignoring of unintended consequences (secondary
  effects with economic costs must be considered.)