Macroeconomics

Macroeconomics

1. Basic economic problem

   • Scarcity problem
     • lack of resources available 
     • A
       • Absolute scarcity (factors of production)
         • Human resources (labour)
         • Natural resources (land)
         • Human-0made resources (capital)
         • Entrepreneurial talents (entrepreneurship)
       • Relative scarcity
       • Scarcity and poverty
     • B
       • Economic goods
         • are scarce, they have utility (satisfy wants) and value (can be brought and sold) they are part of someones wealth, they belong to someone.
       • Free goods
         • are so plentiful nobody would pay for them, although they have utility they have no commercial value i.e. air and water. (don't belong to anyone)
     • C
       • Alternatives
       • Choices
       • Decisions
         • Customs
         • The state
         • The market
     • D
       • Opportunity cost
         • the value of the next best alternative that has been given up.

2. Business cycle