Society faces a short-run trade-off between inflation and unemployment. In the long-run, increasing money usually raises prices. Things are more complex in the short-run. The complexity tends to be a result of economic policies pushing inflation and unemployment in opposite directions.

Prices rise when the government prints too much money. Inflation is an increase in the overall level of prices in the economy. Currently, the 12-month inflation rate in the United States is ending June 2026 is 3.5%, down from 4.2%.

A country's standard of living depends on its ability to produce goods and services. Productivity is the amount of goods and services produced from each unit of labor input. Higher productivity generally leads to a higher standard of living.

Governments can sometimes improve market outcomes. The two rationales for a government to intervene is efficiency or equality. Efficiency means society is getting the maximum benefits from its scarce resources. Equality means those benefits are distributed uniformly among society's members. Most government policies focus to enlarge the economic pie or changes in how the pie is divided. THINK Republican Party (efficiency) versus Democrat Party (equality). All other political p

Markets are usually a good way to organize economic actvity. A market economy is when decisions of a central planner are respected by decisions of millions of firms and households. Firms decide on hiring and manufacturing. Households decide on employment with firms and how to spend their earned income. Firms and Households interact where prices and self-interest guide their decisions.

Trade can make everyone better off. Trade allows a person to specialize in activities he/she does best, such as farming, manufacturing, or technology. Trading with others, people can buy more variety of goods and services at lower costs.

People respond to incentives. Incentive is something that induces a person to act based on punishment or reward. A rational person makes decisions by comparing costs and benefits. So, a rational person responds to incentives. If it is normative for a person to be rational, an incentive is normative for that person to focus on being rational.

Rational people think at the margin. Rational people systematically and purposefully do their best to achieve their objectives, given the opportunities available. For example, a rational firm decides the number of workers to hire and amount of product to make and sell. A rational individual decides on labor time and what goods and services to purchase with earned income for maximum satisfaction. Rational is the normative in Economics.

The cost of something is what you give up to get it. No lunch is free. The in giving up something for something else is called opportunity cost. For example, if one spends a year studying at college full-time and not have a job, one is giving up a year of opportunity cost to earn a full-time salary from a full-time job. Nothing is free.

People face trade-offs. You cannot do all options of something at one single time. For example, a student may face a trade-off when studying for Microeconomics or Mathematics. Or, a parent may face a trade-off when saving for a college fund or spending for a vacation. Or, a society may face a trade-off between having higher wages for workers and a cleaner air/environment. Everyone faces trade-offs.

Principle #01: People face trade-offs. Principle #02: The cost of something is what you give up to get it. Principle #03: Rational people think at the margin. Principle #04: People respond to incentives. Principle #05: Trade can make everyone better off. Principle #06: Markets are usually a good way to organize economic activity. Principle #07: Governments can sometimes improve market outcomes. Principle #08: A country's standard of living depends on its ability to produce go

The main cornerstone in Economics is demand and supply . Demand (via Law of Demand) Looking just at price and quantity and all other things equal, Law of Demand is when the price of a good rises then quantity demanded of that good falls or when the price of a good falls then quantity demanded of that good rises. Supply (via Law of Supply) Looking just at price and quantity and all other things equal, Law of Supply is when the price of a good rises then quantity suppl