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Assignment 101
Introduction to Macroeconomics
Name: Zaki Al-Nassif
ID# 201102844
Assignment 101 Introduction to Macroeconomics
CHAPTER 1
Concepts for Review
1- Scarcity:
It doesn’t mean that goods are scarce it means that the goods are limited to satisfy the
unlimited human wants.
2- Macroeconomic:
The Macroeconomic is the other branch of economics study which is concerned with the
overall performance of the economy. The Macroeconomic deals with issues such as the
growth rate, unemployment, inflation and national income.
3- Normative economics:
The Normative economics is the part of economics that consider value judgments about
economic fairness or what the economy ought to be like or what goals of public policy
ought to be.
4- Fallacy of Composition:
The fallacy of composition occur when we assume that what holds true for part of a
system also holds true for the whole. However this is not applicable in economics
because in economics we often find that the whole is different from the sum of the parts.
5- Ceteris paribus:
Ceteris paribus is another ward for hold other things constant which signifies that a factor
under consideration is changed while all other factors are held constant or unchanged.
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Assignment 101 Introduction to Macroeconomics
6- Capitalistic system:
The Capitalistic system or market economy is a system in which individuals and private
firms make the major decisions about production and consumption. They have the
freedom to choose what to produce and to sell; they also can own resources without any
government intervention.
7- Inputs:
Inputs are commodities or services used by firms in their production process also called
factors of production. An economy uses its existing technology to combine inputs to
produce outputs.
8- Production Possibilities Frontier (PPF):
The production possibilities frontier is a graph showing the maximum quantity of goods
that can be efficiently produced by an economy, given its technological knowledge and
the quantity of available inputs.
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Assignment 101 Introduction to Macroeconomics
CHAPTER 2
Concepts for Review
1- Market:
A market is a mechanism through which buyers and sellers interact to determine prices
and exchange goods, services and assets.
2- The Invisible hand:
The invisible hand is an economic theory first introduce by Adam smith in his book the
Wealth of Nations. This theory state that under perfect competition the markets will go
toward equilibrium by the interaction between demand and supply with no government
intervention. However, if there were a market failure then the invisible hand theory
doesn’t exist.
3- Division of labor:
The division of labor is a method of organizing production whereby each worker
specializes in a part of the productive process. Specialization of labor yields higher total
output because labor can become more skilled at a particular task and because specialized
machinery can be introduced to perform more carefully defined subtasks.
4- Capital:
The capital is durable produced items which are inputs to the outputs of the economy.
The capital consists of a vast and specialize array of machines, buildings, computers,
software and so on.
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Assignment 101 Introduction to Macroeconomics
5- Equity:
Equity is another ward for economic equality which is the concept of fairness in
economics or the fair distribution of income over all citizens.
6- Economic growth:
Economic growth is the increase in the total output of a nation over time. Economic
growth is usually measured as the annual rate of increase in a nation’s real GDP.
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Assignment 101 Introduction to Macroeconomics
CHAPTER 3
Concepts for Review
1- Quantity Demand:
The quantity demand is the amount of a good that buyers are willing and able to purchase
at given price.
2- Demand Law:
The demand law states that when the price of commodity is raised (and other things are
held constant), buyers tend to buy less of the commodity. Similarly, when the price is
lowered other things being constant, quantity demanded increases. This means that there
is a negative relationship between price and quantity demanded.
3- Quantity Supply:
The quantity supply is the amount of goods that sellers are willing to sell at given price.
4- Supply Curve:
The supply curve is a graph showing the quantity of a good that suppliers in a given
market desire to sell at each price, holding other things constant.
5- Determinants of supply:
The determinants of supply are the factors that make the supply curve shift. Those factors
are input prices, technology, and the number of producers.
6- Equilibrium quantity:
Equilibrium quantity is the quantity which both buyers and sellers are willing to trade in a
giving market. In other ward, it’s the point of intersect between the demand and supply
curves.
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Assignment 101 Introduction to Macroeconomics
7- Inferior good:
Inferior good is a good that decreases in demand when consumer income rises.
8- Complementary goods:
Complementary goods are goods which go together in the eyes of consumers or
consumed together such as petrol and vehicles, camera and film SIM and mobile phones,
etc.
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