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PHYSICAL WEALTH: The ownership of productive resources, capital, and property and satisfaction-generating goods. Also termed real wealth. This should be contrasted with financial wealth that is based on ownership of financial or paper assets.
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Lesson Contents
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Unit 1: Basic Flow |
Unit 2: Financial Markets |
Unit 3: Government |
Unit 4: Foreign |
Unit 5: Real World |
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Circular Flow
This lesson introduces the circular flow model of the macroeconomy. The circular flow is a simple model based on the buying and selling relation between the household and business sectors which occurs through the product and factor markets. As a bonus, we complicate the simply circular flow model, by including the government and foreign sectors, and the financial markets. This lesson introduces several important macroeconomic concept, but more importantly, provides a useful model for interpreting macroeconomic activity. - In the first unit, we get an introduction to the simplest circular flow model that includes the household and business sectors and the product and factor markets.
- The second unit builds on the simple model by introducing the financial markets, which highlights the importance of household saving and business investment.
- The circular flow is expanding further in the third unit, with the introduction of the government sector, which highlights how taxes are diverted away from the household sector.
- The fourth unit adds one more sector to the circular flow model, the foreign sector, which illustrates the roles played exports and imports.
- The fifth unit wraps up this lesson by showing how several key measures of production and income revealed in the analysis of gross domestic production related to the circular flow.
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MARGINAL UTILITY The additional utility obtained from the consumption or use of an additional unit of a good. It is specified as the change in total utility divided by the change in quantity. Marginal utility indicates what each additional unit of a good is worth to a consumer and provides a theoretical basis for understanding market demand and the law of demand. Marginal utility generally declines with increased consumption of a good, a reflection of the law of diminishing marginal utility.
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It's estimated that the U.S. economy has about $20 million of counterfeit currency in circulation, less than 0.001 perecent of the total legal currency.
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"You have to find something that you love enough to be able to take risks, jump over the hurdles and break through the brick walls that are always going to be placed in front of you. If you don't have that kind of feeling for what it is you're doing, you'll stop at the first giant hurdle. " -- George Lucas
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ACCR Annual Cost of Capital Recovery
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