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Module The Production Possibilities Curve Model

3. Module The Production Possibilities Curve Model. KRUGMAN'S MACROECONOMICS for AP*. Margaret Ray and David Anderson. Do Now – yes I mean “now”. Lesson 2 – Activity 2 sections: 2.1, 2.2, 2.3 and 2.5 2.4 is a challenge question for our Econ geeks. Unit 1 Test.

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Module The Production Possibilities Curve Model

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  1. 3 ModuleThe ProductionPossibilitiesCurve Model • KRUGMAN'S • MACROECONOMICS for AP* Margaret Ray and David Anderson

  2. Do Now – yes I mean “now” Lesson 2 – Activity 2 sections: 2.1, 2.2, 2.3 and 2.5 2.4 is a challenge question for our Econ geeks.

  3. Unit 1 Test Thursday / Friday - Sept. 11 & 12 Modules 1 & 3 20-30 AP style multiple choice questions. “Tackle the Test” questions are a good sample.

  4. Today’s Objectives • Understand how the production possibilities frontier (PPF) shows opportunity costs for an economy. • Use PPF to show efficient and inefficient output and economic growth. • Learn to identify macro and microeconomic issues

  5. The Production Possibilities Curve

  6. Opportunity Cost - Constant

  7. Increasing Opp Cost

  8. Opportunity Cost - Efficiency efficient full employment Not feasible Inefficient, unemployment

  9. Economic Growth • Expansion of the economy’s production possibilities • Availability of resources (land, labor, capital, entrepreneurship) • Technology: not just electronics, any process that is used to produce goods and services. Example: assembly line.

  10. Economic Growth

  11. Summary • PPF shows opportunity cost of using society’s resources to produce two types of products. • Efficiency = cannot make more of something without giving up something else. • Constant vs. declining opportunity costs. • Underemployment • Economic growth: more resources or better technology.

  12. Brain Break

  13. Micro vs. Macroeconomics Macroeconomics: • Entire economy • “Economic aggregates” Microeconomics: • Individuals, households and firms

  14. Macro or Micro? What will be the effect if the Federal Reserve lowers interest rates to stimulate the economy?

  15. Macro or Micro? What will happen to coffee prices if there is a drought in Brazil?

  16. Macro or Micro? What impact will the rising cost of steel have on auto prices?

  17. Macro or Micro? Do government job training programs lower unemployment?

  18. Macro or Micro? Should we include the value of illegal & immoral activities in their Gross Domestic Product numbers?

  19. Economic Questions

  20. Let’s Play……

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