econ 104 exam 1 rustici – Accurate Q’s and A’s
Microeconomics - -"price theory", observing the details of the consumers behavior, why
are prices what they are, price of specific product, number of employees in a firm
-Macroeconomics - -"the whole economy", coordination of everything, examines the
performance and behavior of the economy as a whole, focuses on economic growth,interest
rates, and inflation
-Price System - -Information about human values in a world in scarcity, not numbers but
info and its value
-Money - -Macro is money and money is the medium of exchange that replaces bartering
-Banks - -banking evolved from warehouses that fundamentally changed the monetary
system, savers and borrowers trade through the institution
-stocks and bonds - -re-trade of ownership, debit and equities
-Correspond Principle - -something in your theory must correspond to reality to isolate
cause and effect
-Theory - -abstraction away from reality. It must have an abstract to have an effect
because reality is a bad theory
-Positive Economics - -"what is", answers that can be proven, on facts and cause/effect
relationships, includes description, theory, development&testing, avoids value judgements
-Normative Economics - -"what ought to be", incorporates value judgments about what
the economy should be like or what particular policy actions should be recommended to
achieve a desirable goal, "what we should do--which is an opinion",
-Assumptions - -In an entire economic system, adding interactions, adds more
assumptions.
Micro has limited set of assumptions (its the science of economics as everything is set).
Macro is built on different assumptions because a lot of theories and assuming
-Translation Science - -we don't answer the big question on why the person thinks or
does, but we try to explain the world once the choice is given
-Scarcity - -forces choice on acting agents(wants/needs that can't all be fulfilled by the
universe) ; we have to make choices because we live in a in universe of scarcity
-Rational Choice - -means purposes-intent, aiming, trying to achieve your result; you can
make mistakes and still be rational
Microeconomics - -"price theory", observing the details of the consumers behavior, why
are prices what they are, price of specific product, number of employees in a firm
-Macroeconomics - -"the whole economy", coordination of everything, examines the
performance and behavior of the economy as a whole, focuses on economic growth,interest
rates, and inflation
-Price System - -Information about human values in a world in scarcity, not numbers but
info and its value
-Money - -Macro is money and money is the medium of exchange that replaces bartering
-Banks - -banking evolved from warehouses that fundamentally changed the monetary
system, savers and borrowers trade through the institution
-stocks and bonds - -re-trade of ownership, debit and equities
-Correspond Principle - -something in your theory must correspond to reality to isolate
cause and effect
-Theory - -abstraction away from reality. It must have an abstract to have an effect
because reality is a bad theory
-Positive Economics - -"what is", answers that can be proven, on facts and cause/effect
relationships, includes description, theory, development&testing, avoids value judgements
-Normative Economics - -"what ought to be", incorporates value judgments about what
the economy should be like or what particular policy actions should be recommended to
achieve a desirable goal, "what we should do--which is an opinion",
-Assumptions - -In an entire economic system, adding interactions, adds more
assumptions.
Micro has limited set of assumptions (its the science of economics as everything is set).
Macro is built on different assumptions because a lot of theories and assuming
-Translation Science - -we don't answer the big question on why the person thinks or
does, but we try to explain the world once the choice is given
-Scarcity - -forces choice on acting agents(wants/needs that can't all be fulfilled by the
universe) ; we have to make choices because we live in a in universe of scarcity
-Rational Choice - -means purposes-intent, aiming, trying to achieve your result; you can
make mistakes and still be rational
