Essay on The Key Concepts in Economics

848 Words Jun 28th, 2015 4 Pages
Assignment 1: The Key Concepts in Economics
Markisha Dill
William Creamer
Principle Of Economics
May 31, 2015

Before sitting down to complete this assignment, I thought thoroughly about economics as a whole. My interest was whether economics was considered an exact since, i.e. Mathematics. Economics has been described as a science, numerous times. So in my search to find out whether economics was a science, I looked at an online dictionary to see how these words were defined. First I looked at economics. The definition stated, “Economics is a social science concerned chiefly with description and analysis of the production, distribution and consumption of services and goods. Then I looked for the word “science”. Science was
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Micro economics is the fine detail. This information is used to study customer trends. While Macroeconomics is the data as a whole. This information presented to investors. 2. Law of Supply & Demand: This is the founding block of economics. As stated in the article,
“Whenever supply of something increases, price decrease and whenever demand increases, price increase” This concept is pretty simple. Williams (2014) further explained the aggregate of supply and demand. a. Aggregate Demand Curve (AD): a curve that shows the level of prices and quantity of real GDP demanded. b. Wealth Affect: The increase in spending that occurs because the real value of money increases when the price level falls. c. Multiplier: The ratio of total in aggregate demand to the initial shift in aggregate demand d. Consumption function: The relationship between the level of income and consumer spending. e. Autonomous Consumption Spending: the part of consumption spending that does not depend on income. f. Marginal propensity to consume (MPC): the fraction of additional income that is spent g. Marginal propensity to save (MPS): the fraction of addition income that is saved h. Aggregate supply curve (AS): a curve that shows the relationship between the level of prices and quantity of output supply. i. Long Run Aggregate Supply Curve: A vertical aggregate supply curve that represents the idea that in

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