absolute vs comparative, input vs output

• Specialization
• Individuals and countries can be made better off if they will produce in what they have a comparative advantage and then trade with others for whatever else they require
• Absolute and Comparative Advantage
• Absolute Advantage
• The producer that can produce the most output or requires the least amount of inputs
• Comparative Advantage
• The producer with the lowest opportunity cost
• Input vs. Output
• Output shows the data as products produced given a set of resources.
• Outcome, result.
• Input shows the data as amount of resources needed to produce a fixed amount of output
• Time.

balance payment

• Balance of payments
• A measure of money inflows as well as outflows in the U.S. and the world.
• Three Accounts
• Current Account:
• Net Exports
• Exports give credit
• Imports give debit
• Net Foreign Income
• Income that is earned by foreign assets.
• Net Transfers
• Foreign aid
• Capital Account:
• This is the balance of capital ownership.
• Investments in the U.S.
• Purchase of financial assets by the foreigners.
• Official Reserves:
• Foreign currency holdings given by the Federal Reserve System.
• Balance of Goods and Services
• Goods exports +|- services exports - (goods imports + service imports)
• Balance on Current account
• Balance of good= services + net investment + net transfers.
• Official Reserves
• Current account  + Capital Account = 0

Phillip's curve

• Phillips Curve
• There is an inverse relationship between inflation and unemployment. Each point on the Phillip's Curve corresponds to a different level of output.
• Long Run
• Occurs at the natural rate of unemployment.
• It is represented by a vertical line.
• LRPC
• Long Run Phillips Curve will only shift if the LRAS shifts.
• Unemployment
• NRU is equal to frictional, seasonal, and structural unemployment.
• Short Run
• Since wages are sticky, inflation changes move the point on the SRPC.
• If inflation persists, then the entire SRPC moves up.
• Stagflation
• Unemployment and inflation simultaneously rise.
• Supply Shocks
• Rapid and significant increases in resource cost.
• If inflation expectations drop due to new technology or efficiency, then the SRPC will move downward.
• Misery Index
• Combination of inflation and unemployment in any given year.