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7 Important Lessons from Macroeconomics

Learn the key lessons from macroeconomics including the benefits of voluntary trade, the importance of comparative advantage, the harmful effects of meddling with prices, the understanding of worldwide rich and poor, the factors affecting living standards, the role of technological development in economic growth, and the implications of social security and medicare.

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7 Important Lessons from Macroeconomics

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  1. 7 Important Lessons from Macroeconomics

  2. Lesson 1: Voluntary Trade Raises Living Standards • Trade Pushes out Production-Consumption Possibilities • For Individuals • For States • For Nations

  3. Lesson 2: Comparative Advantage Shifts Over Time • CA = who can produce with lowest cost • Example: Movement away from agricultural jobs • Short-term hardships due to jobs shifts do not mean long term decline in living standards even for those suffering hardships

  4. Lesson 3: Meddling with Prices Harms Markets • True Even of “Good” Intentions • Higher Prices Signal Consumers & Provide Incentives to Suppliers • Providing Income-Vouchers better way to help low income

  5. Lesson 4: Understanding Rich & Poor on a Worldwide Basis • U.S. GDP-PC (PPP) > $40,000 per year • Europe $25,000-$32,000 • “Middle” Income Countries $5000K - $20,000 • Very Low Income Countries < $1500

  6. Lesson 5: Living Standards Are not Just a Matter of Natural Resources • Widespread-Enforced “Property” Rights • Relative Freedom to Trade • Technological Improvements

  7. Lesson 6: Technological Development Can Sustain Economic Growth • Popular ideas of “Sustainable Development” based on “limits to growth” premise • Recent version of “Malthus” 19th Century economic views • Idea discredited many times through human history

  8. Lesson 7: Social Security & Medicare: Why You Will Care • Huge Shifts in Beneficiaries per Worker • Consequences (unless incomes go through roof) • SS/Med Bigger Share of Government • Government Bigger Share of Economy • Reductions in Benefits

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