Macro Economy

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The Complexity of the modern economy :

An economy is a system, typically a very complex one, in which scarce resource such as labor, land, and machine – are allocated among competing uses.

The self - organizing economy :

The great insight of economist is that an economy based on free market transactions is self organizing.
Efficient Organization
An economy organized by free market, behaves almost as if it were guided by some superior power.
Main characteristics of Market Economies :
- Self Interest
- Incentives
- Market Prices and Quantities
- Institutions
Deffinitions of Economyc from Alfred Marshal :
Is study of mankind in the ordinary business of live.
Economycs is the study of the use the scarce resource to satisfy unlimited human wants.
Resources divided into three board :
- land : include all natural endowments
- labor : include all human resources (mental and physical)
- capital : include all manufactured aids to production such as tools, machinery, and building.
Factor of production :
- Goods (are tangible e.g. cars and shoes)
- Service (are intangible e.g. haircut & education)
Production : the act of making good or services
Consumption : the act of using goods or services to satisfy want.
Four key economyc problem :
- What is produced and how?
- What is consumed and by whom?
- Why are resources sometimes idle?
- Is productive capacity growing?

Micro Economy : the study of the caused and consequence af the allocation of resources as it is affected by the workings of the price system.
Macro Economy : the study of the determination of economyc aggregates such as total output, the price level, employmend, and growth.
The flow of income and expenditure :
- Maximizing decisions
- Marginal decisions

Consumer and producers who are maximizers are constantly making marginal decisions, whether to buy or sell a little bit more or less of the many things that they buy and sell.
The Complexity of productions :
- Specializations (the specializations of individual workers in the production of particular goods or services)
- The devisions of labor :
o Mass production
o Artisans and flexible manufacturing
Market and Money :
- In the course of time, however, trading became entered on particular gathering places called markets
TYPE of Economyc System :
- Traditional Economies
- Command Economies
- Free Market Economies
- Mixed Economies