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SS
Macro Economics
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Macro-Economics
What are the US’s
top 10
economic concerns
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economic concerns
today?
Top 10 U.S. Economic Concerns
1. Recession
2. Unemployment
3. Stagnant Salaries
4. Credit crisis
5. Cost of U.S. wars/military
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6. Lack of Universal Health Care
7. Loss of US competitiveness
8. Outsourcing Jobs
9. Lack of Affordable Housing
10. Social Security
Chapter 1
Limits
Alternatives
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Part 1: The Economizing Problem (Pages 4-10)
Choices
Economics
The social science concerned with how
individuals, and society make optimal
(best) choices under conditions of scarcity.
Why study Economics? T d t d i t d t
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- To understand society and government
- To make adequate personal and professional decisions
The “Traditional“ Economics PerspectiveThe “Traditional“ Economics Perspective
Emphasizes 3 principles:Emphasizes 3 principles:
1.1. SCARCITY & CHOICESCARCITY & CHOICE
- Opportunity CostOpportunity Cost 2. PURPOSEFUL, “RATIONAL” BEHAVIOR2. PURPOSEFUL, “RATIONAL” BEHAVIOR UtilitUtilit ll hh ii ti fti f titi
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- Utility: pleasure, happiness, satisfactionUtility: pleasure, happiness, satisfaction
3 3.. MARGINALISM (MARGINALISM ( Benefits & Costs)Benefits & Costs)
- “Extra”, “additional”, “change in”“Extra”, “additional”, “change in”
Theories, Principles, and Models
- Scientific method:
- Observation of real-world behavior and outcomes
- Formulation of hypotheses
- Testing of hypotheses
- Formulation of “Principles”, economic principles
- Other methodological tools:
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g
- Generalizations
- Ceteris Paribus : Other-things-being-equal
- Graphic expressions
Macroeconomics & Microeconomics
Macroeconomics : examines the economy as a whole. Looks at “aggregates” (SS141)
Microeconomics: looks at specific economic units, the consumer, the firm. (SS341)
Economists develop principles and models at two levels:
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However…
Positive Economics: focuses on facts and cause-effect relations. “ What is ”
Normative Economics : focuses on value judgments and ideological preferences. “ What should be ”
Reviewing Simple GraphsReviewing Simple Graphs
A person with ___ yrs of education earns $____ /yr.
Education $ 12 18K
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14 28K 18 38K 20 58K
Reviewing Simple GraphsReviewing Simple Graphs
A ____ y.o. person runs ___ miles (average) Age Distance 20 10 30 20
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30 20 40 10 50 5 60 0
Reviewing Simple GraphsReviewing Simple Graphs
A household with a $___ income/yr buys ___ lbs of charcoal/yr. Income Lbs Charcoal 28K 11
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38K 11 48K 11 58K 11 68K 11
