AP Macroeconomics Introduction

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AP Macroeconomics Introduction
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• Economics Concerned with the efficient use and
  management of limited productive resources to
  achieve maximum satisfaction of human material
  wants and needs.
• Study of behaviour in producing, distributing,
  and consuming material goods and services in a
  world of scarce resources.

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• Scarcity Wants exceed resources.
• We want more than we are capable of getting.
• Microeconomics Deals with specific economic
  units and a detailed consideration of these
  individual units.
• Macroeconomics Deals either with the economy as
  a whole or the basic subdivision or aggregates
  such as government, household, or business
  sectors, which make up the economy.

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• Ceteris Paribus Other things being equal. In
  economics when you are working on a problem we
  must assume that only those variables will
  change. All others remain the same.

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The Economic Way of Thinking

• Everything has a cost
• People choose for good reasons
• Incentives matter
• People create economic systems to influence
  choices and incentives
• People gain from voluntary trade
• Economic thinking is marginal thinking

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The Economic Way of Thinking

• The value of a good or service is affected by
  peoples choices
• Economic actions create secondary effects
• The test of a theory is its ability to predict
  correctly.