Abraham's AP MacroEconomics Blog

MOVEMENTS OF PPG (POSSIBLE POSSIBILTY GRAPH) Now that we know some basic terminology as well as basic ideas of economics, we will now transition to basic graph of economics and later on follow up with some examples.  "Full Employment"- not 100% employment not 100% productive. 4-5% unemployment. 80-90% factory capacity.  Movements of the PPG 1) Inside of the curve Underemployment- have the people and no resources and vice versa, unemployment, and recession (war, famine, natural disasters etc.)  2) Along the curve Shift along the curve. Equal production or making more than another product. Can always shift to underemployment to the line and vice versa.  3) shifts (outside) of the curve Opportunity cost- next best alternative that you must give up in order to get something else.  Law of the increasing opportunity cost- as you produce more of one good the opportunity cost (far-gone production of another good) will increase. Concave vs Constant PPG- Con

BASIC ECONOMIC CONCEPTS Before anyone can start learning the more complex parts of economics they must first understand some of the more basic principles. Microeconomics- Supply and demand. Firms reaction. Positive vs. Normative economics- Positive economics claims that attempt to describe the world as is. Very descriptive. An example would be minimum wage laws causes unemployment. Current is 7.25. Minimum wage laws causes unemployement. This excludes things like waitors. Normative economics claims that attempt to prescribe how the world should be. Very prescriptive. Based on an opinion. An example is that the government should raise the minimum wage.  Wants- desire of the citizens Needs- basic requirements for survival. Scarcity- fundamental economic problem that all societies face. Unlimited wants with limited resources. Shortage- looking where quantity demanded is greater then quantity supplied. Prices rise. Surplus- opposite of shortage. An abundance of s