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Financial institutions reward savers with various incentives, but not wages. Economic investment refers to the expansion of the economy's productive capability. Banks and other financial institutions promote economic growth by directing household savings to businesses for investment. Increasing cur...

Notes: Ruben's salary in 2006 in 2001 dollars is approximately $64,000. His purchasing power increased between 2001 and 2006. Household spending on education is included in consumption, although it might fit better in investment. In a closed economy, national saving is equal to investment. Public sa...

Ceteris Paribus: "Ceteris paribus" means that all variables except those specified are constant. Complements and Demand: Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect the demand for beer to increase. Equilibrium Quantity and Price: ...

Scarcity arises from the fact that resources are limited. Economics is the study of how society manages its scarce resources. The adage "there is no such thing as a free lunch" means that people face tradeoffs. When computing the opportunity cost of attending a concert, one should consider the pric...

In 1923, prices in Germany rose a trillion times over. Zimbabwe came close to breaking Germany's record in 2008, with an inflation rate of 231 million percent. Inflation: an increase in the average level of prices, not a change in any specific price. To measure inflation in the entire economy, we f...