Introduction to Macroeconomics

Macroeconomics- is the study of the major components of the economy.
 -inflation    -unemployment
-GDP      -supply and demand 

Microeconomics-the study of how households and firms make decisions.
-supply and demand      -market structure  

Positive Vs Normative

• Positive- attempting to describe the world as it is.  (Fact) Ex: minimum wage causes unemployment
• Normative-describes how the world should be.Ex:the government should raise minimum wages

Wants and Needs

• Wants-desires of citizens. Much broader than needs.
• Needs- basic requirements for survival

Scarcity vs shortage

• Scarcity-most fundamental economic problem that all society face.
• Shortage- a situation where quantity demand is greater than quantity supplied.

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