Macroeconomics

Economics is the science of how and why human decision allocates resources creating winners and losers in the game of life. A science is the understanding of cause and effect. Everything we study has a cause and effect, an independent variable that creates a dependent variable. When you throw a tennis ball at the floor (cause/independent variable) you get an effect or a dependent variable, the bounce. The dependent variable cannot occur without the independent variable happening but the independent variable can happen at any time. When there is a change in the independent variable you will have a change in the dependent variable. If you change how hard you throw the ball at the floor you will change how high the ball bounces. The science can also be studied in a social aspect and not just a physical aspect. For example if you give your friend a ride then in return he will owe you a ride or favor.

Human decision is the effect of five independent variables; Freedom, Liberty, Scarcity, Sacrifice, and Selfishness. Freedom is the ability to make a choice such as the Freedom of speech and ability to say what we want. Liberty is the choices we have such at how and when we can exercise our freedom of speech. Scarcity is the amount of choice we have such as we can buy a house but only have enough money for one house. Sacrifice is the fact that we cant have everything we want and must give up something to receive something in return, such as I want to go to the baseball game but wont be able to work overtime that same night. Selfishness is a non-moralistic motivation. We make decision to either receive a reward or avoid a punishment. These five independent variables together create a decision. If any of these independent variable are changed then the decision is changed. For example if a bum is and you want to make yourself feel better by giving him money but if you don’t have a lot of money (change in scarcity) then you are not going to give him money....