Change: Principle of Comparative Advantage: the total output will be greatest when each good is produced byb thhe nation that has the lowest domestic opportunity cost for that good.Specializing based on comparative advantage:Terms of trade:Gains from trade:The case for free trade:   View changes from previous version. (Word count: 44) View all updates.

Change: when imports exceed exports (ie. US imports of goods exceeded US exports of goods by $782 billion in 2005)Trade Surplus: when exports exceed inports (ie. US exports of services exceeded US inports of services by $58 billion in 2005)Principle Exports: eg. chemicals, consumer durables,   View changes from previous version. (Word count: 65) View all updates.

Change:By increasing the number of working hours, encouraging workers to postpone retirement, enter the labor force, and motivating them to work harder, long periods of unemployment can be avoided. Incentive to save and invest invest:High marginal tax rates reduce the rewards for savings and investingsConsumption might   View changes from previous version. (Word count: 170) View all updates.

Change:Sudden large increases in resource costs and push short-run aggregate supply leftward (such as OPEC in the '70s and '80s)These shocks distort the usual inflation-unemployment relationship: a leftward shift of the short-run aggregate supply curve increases price level and increases the unemployment rate (cost-push inflation)Stagflation's Demise:However,   View changes from previous version. (Word count: 145) View all updates.

Change:The distribution of ownership of government securities is highly uneven, and larger proportions are generally in the hands of the wealthier groupsHowever, since the Federal tax system is only slightly progressive, payment of interest on the public debt mildly increases income inequaltyIncome is transfered from   View changes from previous version. (Word count: 115) View all updates.

Change:For example, they might favor large tax cuts which are less efficient than direct government spending for expansionary fiscal policy because it will be more popular with the people. They may also increase government spending on popular items such as farm subsidies, health care, highways, education, and homeland security.Thus,   View changes from previous version. (Word count: 218) View all updates.

Change:exceeds potential GDP.eg. U.S. during Vietnam war in the 1960s, where large government spendings on the war shifted the economy's AD curve to the right, producing great inflation.Decreases in AD: recession and cyclical unemployment:Decreases in AS: cost-push inflation:Increases in AS: full-employment with price-level stability:   View changes from previous version. (Word count: 119) View all updates.

Change:A higher price level reduces the real value (purchasing power) of the public's accumulated savings balances. In other words, the real value of assets wth fixed money values (eg. savings accounts, bonds) diminishes.The public is then poorer in real terms and will reduce spending.Higher prices mean less consumption   View changes from previous version. (Word count: 199) View all updates.

Change:These are social security payments, welfare payments, and veterans' payments that the government makes directly to households. Recipients contribute nothing to current productionPrivate Transfer Payments: Money that parents give children, cash gifts etc. They produce to output, but simply transactionstransfer funds from one private individual to another.Stock   View changes from previous version. (Word count: 193) View all updates.

Change: is a measure, or ratio, of the price of a specified collection of goods and services (market basket) in a certain year as compared to the price of the same "market basket" in a reference year (base year)Price Index in a certain year   View changes from previous version. (Word count: 122) View all updates.