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Ch. 1 The Science of Macroeconomics
Terms in this set (18)
studies the forces that influence the economy as a whole
measures the total income of everyone in the economy (adjusted for the level of prices), tends to grow over time, not a steady growth
measures how fast prices are rising
measures the fraction of the labor force that is out of work
a mild decrease in real GDP
a severe decrease in real GDP
period of falling prices
used by economists to illustrate, often in mathematical terms, the relationships among the variables
those variables that a model tries to explain
those variables that a model takes as given
the assumption that markets are normally in equilibrium, so the price of any good or service is found where the supply and demand curves intersect
Although market-clearing models assume that all wages and prices are flexible, in the real world some wages and prices are...
the study of how households and firms make decisions and how these decisionmakers interact in the marketplace
a central principle of microeconomics- the idea that households and firms do the best they can for themselves given their objectives and the constraints they face
households choose their purchases to maximize their level of satisfaction
firms make production decisions to maximize their...
models with flexible prices describe the...
models with sticky prices describe the...
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