Economics. Allocation and study of scarce resources.

• Micro-economics: individual level, low level.

• Macro-economics: aggregate, large scale level. Country, government, gdp ...

• Econometrics: use data to test models from micro or macro economics.

Ceteris peribus: all else being equal.

Price <-> Quantity

For sin goods, price increase does not decrease demand (by much). e.g: Cigarettes.

Opportunity cost: Value of best forgone option.

The cost of, say, education, is the sum of cost of education (plus food, shelter) and the opportunity cost. The opportunity cost here, would be the money you'd have made if you worked the years instead of the education.

Inflation: the rate of change of price.

The division with $P_t$ is important because it normalizes to the price; inflation of goods with different prices are compared fairly.

Measuring of inflation. A basket of items is chosen, and their combined inflation is measured. This offsets variations in individual goods and gives an overall measure. We can choose the contents of the collection so as to get the inflation as felt by say, a middle class resident of trivandrum, etc.

GDP: value of all the goods and services produced in a country in a year.

Value: price $\times$ quantity.

GDI (income)

A US company working in India contributes to Indian GDP, not american.