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Questions and Answers
What is the fundamental economic problem that households and firms face?
What determines the price and quantity of a good or service in a market?
What is the study of the economy as a whole, focusing on issues such as economic growth, inflation, and unemployment?
What is the value of the next best alternative that is given up when a choice is made?
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What is a sustained increase in the general price level of goods and services in an economy over time?
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What is the number of people able and willing to work, but unable to find employment?
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Study Notes
Economics
Economics is the study of how individuals, businesses, governments, and societies make decisions about how to allocate resources to meet their unlimited wants and needs.
Microeconomics
Microeconomics focuses on individual economic units, such as:
- Households: Consumers who make decisions about what goods and services to purchase.
- Firms: Businesses that make decisions about what goods and services to produce.
- Markets: Places where households and firms interact to exchange goods and services.
Key concepts in microeconomics include:
- Supply and Demand: The price and quantity of a good or service are determined by the interaction between the quantity of the good or service that producers are willing to supply and the quantity that consumers are willing to demand.
- Opportunity Cost: The value of the next best alternative that is given up when a choice is made.
- Scarcity: The fundamental economic problem of unlimited wants and needs, but limited resources.
Macroeconomics
Macroeconomics focuses on the economy as a whole, examining issues such as:
- Economic Growth: An increase in the production of goods and services in an economy over time.
- Inflation: A sustained increase in the general price level of goods and services in an economy over time.
- Unemployment: The number of people able and willing to work, but unable to find employment.
Key concepts in macroeconomics include:
- Gross Domestic Product (GDP): The total value of all final goods and services produced within an economy over a specific time period.
- Fiscal Policy: The use of government spending and taxation to influence the overall level of economic activity.
- Monetary Policy: The actions of a central bank to control the money supply and interest rates to promote economic growth and stability.
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Description
Understand the basics of economics, covering microeconomics concepts like supply and demand, opportunity cost, and scarcity, as well as macroeconomics concepts like economic growth, inflation, and unemployment.
