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ME15 - Unit 1 - 1 To 38 Slides
ME15 - Unit 1 - 1 To 38 Slides
ME15 - Unit 1 - 1 To 38 Slides
Unit 1 : Introduction
Macroeconomics studies the overall economy. This can include a distinct geographical
region, a country, a continent or even the whole world.
• Monetary and fiscal policy. e.g. what effect does interest rates have on whole economy?
• Reasons for inflation, and unemployment
• Economic Growth
• International trade and globalization
• Reasons for differences in living standards and economic growth between countries.
• Government borrowing
“The price of milk should be $6 a gallon to give dairy farmers a higher living standard and to save
the family farm”.
This is a normative statement, because it reflects value judgments. This specific statement makes
the judgment that farmers deserve a higher living standard and that family farms ought to be
saved.
Ex: if a gardener decides to grow carrots, his or her opportunity cost is the
alternative crop that might have been grown instead (potatoes, tomatoes,
pumpkins, etc.)
1 23
2 22
3 21
4 20
12 12
24 0
Robinson-OC
Friday-OC
Production Possibility Curve
• Functions
• Variables
• Equations
• Graphs
• Slope
• f(2) = 1
• f(16) = 8
• f(−10) = −5
AR= R/q
• Note: the firm will accept this business proposition provided there is no
better business proposition available to the firm.