ECO 2301 Exam 1 Review

What is Macroeconomics?

• The study of how households and firms make decisions and how they interact in markets.

• The study of how society manages its scarce resources.

• The study of economy-wide phenomena, including inflation, unemployment, and economic growth.

What is Microeconomics?

• The study of economy-wide phenomena, including inflation, unemployment, and economic growth.

• The study of how households and firms make decisions and how they interact in markets.

• The study of how society manages its scare resources

What is the first principle of economics?

• People Face Trade-offs

• People Respond to Incentives

• Society Faces a Short-Run Trade-off between Inflation and Unemployment

• Governments Can Sometimes Improve Market Outcomes

What is the second principle of economics?

• Trade Can Make Everyone Better Off

• The Cost of Something Is What You Give Up to Get It

• People Face Trade-offs

• A Country's Standard of Living Depends on Its Ability to Produce Goods and Services

What is the third principle of economics?

• Markets Are Usually a Good Way to Organize Economic Activity

• The Cost of Something Is What You Give Up to Get It

• Rational People Think at the Margin

• Prices Rise When the Government Prints Too Much Money

What is the fourth principle of economics?

• Rational People Think at the Margin

• Governments Can Sometimes Improve Market Outcomes

• Society Faces a Short-Run Trade-off between Inflation and Unemployment

• People Respond to Incentives

What is the fifth principle of economics?

• Trade Can Make Everyone Better Off

• A Country's Standard of Living Depends on Its Ability to Produce Goods and Services

• People Respond to Incentives

• People Face Trade-offs

What is the sixth principle of economics?

• Prices Rise When the Government Prints Too Much Money

• Markets Are Usually a Good Way to Organize Economic Activity

• Trade Can Make Everyone Better Off

• The Cost of Something Is What You Give Up to Get It

What is the seventh principle of economics?

• Markets Are Usually a Good Way to Organize Economic Activity

• Society Faces a Short-Run Trade-off between Inflation and Unemployment

• Governments Can Sometimes Improve Market Outcomes

• Rational People Think at the Margin

What is the eighth principle of economics?

• Governments Can Sometimes Improve Market Outcomes

• People Respond to Incentives

• People Face Trade-offs

• A Country's Standard of Living Depends On Its Ability to Produce Goods and Services