Econ Notes: Introduction to Macroeconomics

Macroeconomics vs. Microeconomics

• Macroeconomics study major components of the economy, whereas microeconomics study how households and firms work and how they interact on the market.
• Macroeconomics deals mainly with inflation, GDP vs. GNP, and business cycles while microeconomics deals with market structures. 
• Both deal with supply & demand.

Positive Economics vs. Normative Economics

• Positive attempts to describe the world as it is. Ex: Minimum wage laws cause unemployment
•  Normative attempts to prescribe how the world should be. Ex: The government should raise minimum wage

Wants vs. Needs

• desires of citizens; much broader than needs
• Quality demand > Quality supply

Scarcity vs. Shortage

• Scarcity is a fundamental economic problem facing all societies and focuses on how to satisfy unlimited wants with supply.
• Quality demand > Quality supply

Consumer Goods vs. Capital Goods

• Consumer goods are goods intended for final use by the consumer 
• Capital goods are goods used in the creation of other goods.