Chapter 1 - Basic Economic Concepts (copy)

The American Economic Association has yearly meetings that invite thousands of economists regardless of their age, gender, and identity to participate in viewing sixty presentations that take place at the same time.

These presentations incorporate important and crucial discussions such as the stock market’s future, financial associations, and assets, to even discussing simple tedious tasks like the household chores of cleaning. This illustrates the impression that the yearly meetings are extremely versatile, yet important considering the large scale of its event.

The meeting invites a large range of people because it recognizes the importance of everyone’s roles in their careers. The roles being a stock market broker, or a household worker, as the meeting emphasizes the importance of individual choice.

Individual choice: Decisions that involve making a choice from a limited number of options because not all of the options can be chosen. A person HAS to make a choice because resources are scarce, and therefore, not all resources can be chosen.

To understand how the economy works, a person, regardless of their career of being a stock market broker, or a household worker, must understand the importance of individual choice.

Decisions made by one person can affect the entirety of the state of the environment, even ones that may be considered tedious, like your meal plan.

Economic interactions are understood by viewing markers for a specific item, rather than viewing the larger scale of items, a variety, or a selection to choose from, as too many options can also pose negative contributing factors.

It is important to recognize the severity of choices made, and choosing one option hinders the opportunities that could have been benefited from the alternative options.

Economists conducting the economic analysis may be seen through examining conclusions on subjects tested against variables to form their assumptions.

A person’s view is different from where their standpoint maybe, as their opinion on such a state is easily subject to change based on the contributing factors of their surrounding environment.

The environment subject to variables and varied change can be derived from the glass half full and the glass half empty statement, as a person’s opinion is dependent upon the basis of contributing factors such as their environment, their mindset, and their knowledge of what the facts they believe might entail. Similarly, Economists base their conclusions upon what they perceive their version of reality incorporates.

The Hooverville town was named after President Herbert Hoover, elected in 1928.

The town emphasizes the significance of being notorious for its deteriorating state, as it can be associated with the time period of the Great Depression.

During the Depression, the people of Hooverville blamed President Hoover for their misfortunes, as the president himself seemed to have no understanding behind the reasoning of the economic downfall, leading the citizens to become even more displeased with their president’s lack of knowledge.

The business cycle incorporates the changes between the economic state of positive and negative changes, commonly referred to in the macro-economy.

• Depression is an extremely deep negative change that takes place for a long period of time and cannot be easily changed by contributing factors. The most famous depression, known as the Great Depression, took place during August 1929 – March 1933, as the duration of 43 months left a great impact on the US Economy.

The time period following the great depression that incorporates a steady rise in employment refers to the term as expansions but is more commonly known as recoveries.

There have been a total of 11 decisions so far in US History, as noted according to the National Bureau of Economic Research since World War II, as the average recession lasted 11 months following the average expansion which lasted 58 months.

• The term recession refers to a period of reduced economic activity. Although it is not as serious as depression, it can lead to major negative changes such as a large unemployment rate, reduced income, reduced production, and lower living standards on a wide scale.

• The term unemployment rate refers to the percentage of people working in the labor force that does not have a job, often used for analytical purposes for understanding the conditions of the job market, such as whether or not the stock market is providing positive or negative variable changes.

It is a commonly inferred assumption that macroeconomic analysis has guided politicians toward stabilizing the economy and for the benefit of their own companies.