Economics

?? Chapter 4: Comparative Advantage and Trade Trade: people divide tasks among themselves and each person provides a good or service that other people want in return for different goods and services wanted Gains from Trade: dividing tasks allows for more people to get more of what they want Specialization: When gains from trade are caused by division of tasks Adam Smith?s (1776) The Wealth of Nations: 18th century pin factory where each person specializes in the production of one thing Production Possibilities: curve model is particularly useful for illustrating gains from trade based on comparative advantage Most important insights in all of economics is that there are gains from trade even if one of the trading parties isn?t especially good at anything

Chapter 2: Module Introduction to Macroeconomics ? Business Cycle: differences between downturns and upturns in macroeconomic Depression: Deep and prolonged downturn (ex: great depression) Recession: shorter economic downturns where output and employment are dropping (ex: state of the US now) Expansion: upturn where output and employment are rising Employment/Unemployment Employment: total number of people working for pay, rises in good economy Unemployment: total number of people who aren?t employed, rises in bad economy Labor Force: A country?s sum of employment and unemployment Unemployment Rate: percentage of labor force/people in country who are unemployed Aggregate Output Output: quantity of goods and services, decreases in bad economy