Micro and Macroeconomics Overview

Definition: Study of individual consumers and businesses and their decision-making processes.
Key Concepts:
- Supply and Demand: Determines prices and quantities in a market.
- Elasticity: Measures how much quantity demanded or supplied responds to price changes.
- Marginal Utility: Additional satisfaction gained from consuming one more unit of a good or service.
- Opportunity Cost: The value of the next best alternative foregone when making a decision.
- Market Structures: Includes perfect competition, monopolistic competition, oligopoly, and monopoly.

Definition: Focuses on the economy as a whole, studying aggregate variables.
Key Concepts:
- Gross Domestic Product (GDP): Total value of all goods and services produced in a country.
- Unemployment Rate: Percentage of the labor force that is unemployed and actively seeking work.
- Inflation: Rate at which the general level of prices for goods and services rises.
- Monetary Policy: Central bank actions that manage the money supply and interest rates.
- Fiscal Policy: Government spending and tax policies to influence economic conditions.

Definition: Frameworks and models that describe how economies function.
Key Concepts:
- Classical Economics: Emphasizes free markets, competition, and the self-regulating nature of economies.
- Keynesian Economics: Argues that active government intervention is necessary to manage economic cycles.
- Supply-Side Economics: Focuses on boosting economic growth through tax cuts and deregulation.
- Monetarism: Emphasizes the role of governments in controlling the amount of money in circulation.

Definition: Study of psychological, social, and emotional factors on economic decisions.
Key Concepts:
- Bounded Rationality: Decision-making is limited by available information, cognitive limitations, and time constraints.
- Prospect Theory: People value gains and losses differently, leading to risk-averse or risk-seeking behavior.
- Nudges: Small interventions that can significantly alter behavior without restricting options.
- Mental Accounting: People treat money differently depending on its source or intended use, affecting spending behavior.

Focuses on individual consumer and business behavior and decision-making.
Supply and Demand: Core concept influencing market prices and quantity of goods/services available.
Elasticity: Key measure indicating responsiveness of demand/supply to price variations.
Marginal Utility: Represents the extra satisfaction derived from consuming one additional unit of a product or service.
Opportunity Cost: Refers to the value lost of the next best alternative when making a choice.
Market Structures: Divided into categories such as perfect competition, monopolistic competition, oligopoly, and monopoly, impacting market dynamics and strategies.

Deals with the economy as a whole, exploring collective economic indicators.
Gross Domestic Product (GDP): Measures the total monetary value of all goods and services produced within a nation's borders.
Unemployment Rate: Indicates the proportion of the labor force that is jobless and actively looking for employment.
Inflation: Reflects the rate at which the overall price levels of goods and services increase over time.
Monetary Policy: Encompasses actions taken by central banks to regulate the money supply and influence interest rates.
Fiscal Policy: Involves government strategies related to spending and taxation aimed at shaping economic conditions.

Provides frameworks and models that elaborate on economic performance and behavior.
Classical Economics: Advocates for minimal government intervention with an emphasis on free markets and competitive practices.
Keynesian Economics: Suggests that government intervention is essential for stabilizing the economy and addressing economic fluctuations.
Supply-Side Economics: Promotes economic growth through tax reductions and eased regulations to encourage investment.
Monetarism: Stresses the importance of regulating money supply as a means to manage economic activity.

Examines how psychological and social factors influence economic decision-making.
Bounded Rationality: Concept that acknowledges limitations in information processing and decision-making capabilities.
Prospect Theory: Suggests that people have different reactions to gains versus losses, influencing their risk behavior.
Nudges: Small changes in the environment or context that can lead to significant shifts in behavior without restricting choices.
Mental Accounting: Highlights how individuals categorize money differently based on its source or purpose, impacting spending habits.