lOMoAR cPSD| 6861666
ECON 248 Unit 1: Intro to Macroeconomics with
Complete Solution | New Update 2025-2026
Unit 1: Introduction to Macroeconomics
Overview Reading
Assignment Key
Terms
• Chaters 1-4 of the textbook
• Economics: the study of how society manages and allocates its scares resources.
• Scarcity: Society has limited resources and cannot produce all the goods and services
society wishes to have
• Efficiency: Allocating resources in a way that maximizes benefits from scarce resources
• Equity: Benefit from resources are distributed fairly among societies members
• opportunity cost: What do you give up to get an item or experience
• rational people: Systemically and purposefully do the best they can to achieve their
objectives, given the opportunities have
• marginal changes: Small incremental changes to an existing plan of action
• Incentive: Something (punishment or reward) that induces a person to act
• market economy: An economy that allocates resources through the decentralized
decisions of many firms and households as they interact in markets for goods an services
• property rights: The ability of an individual to own and exercise control over scarce
resources
• market failure: A situation in which a market left on its own fails to allocate resources
efficiently
• Externality: The impact of one persons actions on the well-being of a bystander. (Can be
positive or negative)
• market power: The ability of an economic actor (or group) to have a substantial influence
on market prices
• Inflation: An increase in the overall level of prices
• business cycle: Fluctuation in economic activity like employment and production
• Productivity: The quantity of goods and services produced from each hour of a worker's
time.
• circular-flow diagram: A visual model of the economy that shows how a dollar flows
through the market for goods and services
• production possibilities frontier: A graph that shows the combinations of output that an
economy can possibly produce given the available factors of production and the available
production technology.
• Microeconomics: Study of how households and firms make decisions and interact with
individual specific markets
, lOMoAR cPSD| 6861666
• Macroeconomics: Study of economy-wide phenomena, including inflation,
unemployment, and economic growth
• positive statements: Descriptive statements about how the world is based on data and
scientific evidence
• normative statements: Perspective statements about how the world should be and involve
non scientific aspects and judgments.
• absolute advantage: The comparison among producers of a good according to their
productivity (who produces more of each good)
• comparative advantage: The comparison among producers of a good according to their
opportunity cost (who gives up less to produce each good)
• Exports: Goods/services a country specializes in and sends to other countries
• Imports: Goods/services a country does not specialize in and receives from other
countries
• competitive market: A market where many buyers and sellers compete so individuals
have negligible impact on market price
• Market: A group of buyers and sellers of a good or product
• Demand: The relationship between price and quantity demanded in its entirety
• demand curve: The graphical representation of the relationship between price and
demand
• change in demand: The change in overall demand. (movement of the whole curve)
• quantity demanded: How much of a good or service people are willing and able to buy at
a given price.
• change in quantity demanded: The change in quantity demand at a specific price point
(movement along the curve)
• Supply: The relationship between price and quantity supplied in its entirety
• supply curve: The graphical representation of the relationship between supply and price
• quantity supplied: The quantity of good or service the seller produces at a given price
• change in supply: The change in overall level of supply (movement of the whole curve)
change in quantity supplied: The change in quantity supplied at a given price point
(movement along the curve)
• Equilibrium: The natural intersection point where quantity demanded= quantity supplied
equilibrium price: The price level at the intersection point.
• equilibrium quantity: The quantity supplied/demanded at equilibrium
• Surplus: Quantity supplied > Quantity demanded
• Shortage: Quantity demanded > Quantity supplied
• law of supply and demand: The inverse relationship between supply and demand and how
they behave in a way to achieve equilibrium
Learning Objectives
1. Define economics and scarcity
a. Comes from the Greek word for "one who manages the household"
b. Like a household society must make decisions on what jobs will be done and by
who. What does it need vs what does it want?
ECON 248 Unit 1: Intro to Macroeconomics with
Complete Solution | New Update 2025-2026
Unit 1: Introduction to Macroeconomics
Overview Reading
Assignment Key
Terms
• Chaters 1-4 of the textbook
• Economics: the study of how society manages and allocates its scares resources.
• Scarcity: Society has limited resources and cannot produce all the goods and services
society wishes to have
• Efficiency: Allocating resources in a way that maximizes benefits from scarce resources
• Equity: Benefit from resources are distributed fairly among societies members
• opportunity cost: What do you give up to get an item or experience
• rational people: Systemically and purposefully do the best they can to achieve their
objectives, given the opportunities have
• marginal changes: Small incremental changes to an existing plan of action
• Incentive: Something (punishment or reward) that induces a person to act
• market economy: An economy that allocates resources through the decentralized
decisions of many firms and households as they interact in markets for goods an services
• property rights: The ability of an individual to own and exercise control over scarce
resources
• market failure: A situation in which a market left on its own fails to allocate resources
efficiently
• Externality: The impact of one persons actions on the well-being of a bystander. (Can be
positive or negative)
• market power: The ability of an economic actor (or group) to have a substantial influence
on market prices
• Inflation: An increase in the overall level of prices
• business cycle: Fluctuation in economic activity like employment and production
• Productivity: The quantity of goods and services produced from each hour of a worker's
time.
• circular-flow diagram: A visual model of the economy that shows how a dollar flows
through the market for goods and services
• production possibilities frontier: A graph that shows the combinations of output that an
economy can possibly produce given the available factors of production and the available
production technology.
• Microeconomics: Study of how households and firms make decisions and interact with
individual specific markets
, lOMoAR cPSD| 6861666
• Macroeconomics: Study of economy-wide phenomena, including inflation,
unemployment, and economic growth
• positive statements: Descriptive statements about how the world is based on data and
scientific evidence
• normative statements: Perspective statements about how the world should be and involve
non scientific aspects and judgments.
• absolute advantage: The comparison among producers of a good according to their
productivity (who produces more of each good)
• comparative advantage: The comparison among producers of a good according to their
opportunity cost (who gives up less to produce each good)
• Exports: Goods/services a country specializes in and sends to other countries
• Imports: Goods/services a country does not specialize in and receives from other
countries
• competitive market: A market where many buyers and sellers compete so individuals
have negligible impact on market price
• Market: A group of buyers and sellers of a good or product
• Demand: The relationship between price and quantity demanded in its entirety
• demand curve: The graphical representation of the relationship between price and
demand
• change in demand: The change in overall demand. (movement of the whole curve)
• quantity demanded: How much of a good or service people are willing and able to buy at
a given price.
• change in quantity demanded: The change in quantity demand at a specific price point
(movement along the curve)
• Supply: The relationship between price and quantity supplied in its entirety
• supply curve: The graphical representation of the relationship between supply and price
• quantity supplied: The quantity of good or service the seller produces at a given price
• change in supply: The change in overall level of supply (movement of the whole curve)
change in quantity supplied: The change in quantity supplied at a given price point
(movement along the curve)
• Equilibrium: The natural intersection point where quantity demanded= quantity supplied
equilibrium price: The price level at the intersection point.
• equilibrium quantity: The quantity supplied/demanded at equilibrium
• Surplus: Quantity supplied > Quantity demanded
• Shortage: Quantity demanded > Quantity supplied
• law of supply and demand: The inverse relationship between supply and demand and how
they behave in a way to achieve equilibrium
Learning Objectives
1. Define economics and scarcity
a. Comes from the Greek word for "one who manages the household"
b. Like a household society must make decisions on what jobs will be done and by
who. What does it need vs what does it want?
