March 23, 2018 

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SCARCE: The general condition indicating that a good or resource is limited relative to the what people want. In terms of ALL resources and goods throughout society, the related term scarcity is used. Being scarce is what makes it possible to exchange goods and resources through markets, and most importantly, charge a price. If a good is not scarce, which means that the economy has more than enough to satisfy all available uses, then there is no way to sell it. Who would buy such an item, pay a price for it, give up something of value in exchange for it, when it is so abundant? Likewise, if a item is so abundant, using it to satisfy one use does not impose an opportunity cost on other uses.

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Lesson 11: Circular Flow | Unit 2: Financial Markets Page: 10 of 22

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  • The main function of financial markets, which is to divert national income from household consumption to business investment.
  • The difference between the real or physical side of the economy (the production of goods that satisfy wants and needs) and the paper or financial side (legal claims on or ownership of physical resources, goods, and production).
  • How income is diverted from legal-claim buyer to legal-claim seller through the financial markets.
  • Why saving can be thought as a nonconsumption use of income, as making a loan, or as supplying income to the financial markets in exchange for a legal claim.
  • Two basic reasons to save: (1) in return for an interest payment or (2) to accumulate income that can be spent later.
  • Investment, which is business sector expenditures on gross domestic product for capital goods.
  • How the business sector borrows income through financial markets and uses this income flow to finance capital investment.
  • Why adding saving, investment, and financial markets does not change the total volume of the circular flow.
  • That imbalances between saving and investment trigger economic stability, business cycles, unemployment, and inflation.

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A mathematical connection between a marginal value and the corresponding average value stating that the change in the average value depends on a comparison between the average and the marginal. This mathematical relation between average and marginal surfaces throughout the study of economics, especially production (average product and marginal product), cost (average total cost and marginal cost), and revenue (average revenue and marginal revenue). A similar relation is that between a total value and the corresponding marginal value.

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[What's This?]

Today, you are likely to spend a great deal of time at a crowded estate auction hoping to buy either a coffee cup commemorating last Friday (you know why) or a wall poster commemorating the first day of spring. Be on the lookout for small children selling products door-to-door.
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The penny is the only coin minted by the U.S. government in which the "face" on the head looks to the right. All others face left.
"It is not the straining for great things that is most effective; it is the doing of the little things, the common duties, a little better and better."

-- Elizabeth Stuart Phelps, Writer

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