INTRODUCING ECONOMICS

 

1-      Factor of production:

·        Labour  ­­­­­­­-------> human being

·        Land and row materials ----------> natural inputs

·        Capital --------> industrial inputs; all inputs that themselves has been produced  

2-      Scarcity is the access of human wants over what can be produced

i.e. human wants are unlimited whereas resources are limited

3-      Aggregate demand is the total level of spending in the economy.

Aggregate supply is the total amount of output in the economy.

4-      National output should grow by using resources as fully as possible.

5-      Inflation is the general rise in the level of prices throughout the economy.

6-      The rate of inflation is the percentage increase in the level of prices over twelve-month period.

7-      Factors of inflation

1-      Aggregate demand is much higher than aggregate supply.

Demand > supply ------> prices ↑ ------> inflation ↑

8-      Current account balance of payments = Exports – Imports

9-      Balance of payments deficit:

2-     The access of imports over exports

 

10-   The result of

A- The aggregate demand is higher than the aggregate supply

1-     Inflation 2- Balance of payments deficit

B- The aggregate supply is higher than the aggregate demand

1- Unemployment             2- Recession

11-  Recession is a decline in output

·        Aggregate supply > aggregate demand -------> people spend less                ------> unsold stock -------- cut down in the production

12-  Macroeconomic studies the relationships between aggregate demand and aggregate supply