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Macroeconomics
We have explained several concepts and Macroeconomic Aggregates which form the basic terminology of macroeconomic analysis. Like other empirical sciences, economic analysis deals with those concepts which can actually be measured, things such as prices of industrial production, stock prices, interest rates, gross investment, number of the unemployed, national income, or the general price level.
The concepts like national income and national product are most significant in macroeconomic accounting. As the accounting statement of a firm provides information on the flow of revenues and expenses fully to show the firm's performance, the national income accounts supply similar information for the economy as a whole. They provide a comprehensive overview of how the economy is doing. Without a measuring rod for national income aggregates it would be difficult to assess the performance of the economy and the economic phenomenon as such. In this chapter, an effort is made to explain how the flow of an economy's output is measured and why the major economic aggregates are considered as important business and market movers.
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: Suppose that 100 people live around a hazardous waste dump. If the people continue to live there for 20 years, one of them will likely contract a painful, non-fatal cancer that w
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The following Table summarizes the profits of two firms as a function of their capacity investments levels (you can also interpret these levels as the quantities they produce):
Analyze the relationship between the production possibilities curve and the circular flow diagram. Discuss how the change of production possibilities curve affects the circular flo
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