9. Prices rise when the government prints too much money. Ination is an increase in the overall level of prices in the economy. o One cause of inflation is the growth in the quantity of money o When the government creates large quantities of money, the value of the money falls
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 9. Prices rise when the government prints too much money. Inflation is an increase in the overall level of prices in the economy. One cause of inflation is the growth in the quantity of money. When the government creates large quantities of money, the value of the money falls
10. Society faces a short-run tradeoff between inflation and unemployment. The Phillips Curve illustrates the tradeoff between inflation and unemployment INflation => t Unemployment It's a short-run tradeoff
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 10. Society faces a short-run tradeoff between inflation and unemployment. The Phillips Curve illustrates the tradeoff between inflation and unemployment: ØInflation Ö ×Unemployment It’s a short-run tradeoff!
Summary o When individuals make decisions they face tradeoffs Rational people make decisions by comparing marginal costs and marginal benefits
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Summary When individuals make decisions, they face tradeoffs. Rational people make decisions by comparing marginal costs and marginal benefits
Summary o People can benefit by trading with each other o Markets are usually a good way of coordinating trades. e Government can potentially improve market outcomes
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Summary People can benefit by trading with each other. Markets are usually a good way of coordinating trades. Government can potentially improve market outcomes
Summary A country's productivity determines its living standards. Society faces a short-run tradeoff between ination and unemployment
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Summary A country’s productivity determines its living standards. Society faces a short-run tradeoff between inflation and unemployment