1-Whats Economics.pptxVIP

Chapter one: What is Economics?“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.” John Maynard Keynes, The General Theory of Employment, Interest and Money. 1936;Society’s Two-Part Problem;Society’s Two-Part Problem Continued;Society’s Two-Part Problem Continued;Our Fundamental Problem!;3 Questions for Society;Economic Systems;ECONOMICS AS A SOCIAL SCIENCE;When the government prints too much money, it causes inflation (a rise in the general price of goods/services) Positive: this statement can be tested The Fed should leave interest rates alone in their next meeting Normative: this statement is an opinion Our reliance on fossil fuels is causing global climate change Positive: this statement can be tested The government should encourage (subsidize) alternative means of energy use away from fossil fuels Normative: this statement is an opinion;MICROECONOMICS vs. MACROECONOMICS;Microeconomics;Macroeconomics;How will a drought in the Midwest affect the market (price and output) of corn? Micro How will the Fed’s increase of short-term interest rates affect the country’s savings rate? Macro How will uncertainty in the Middle East affect the price of crude oil (and gasoline)? Micro;ASSUMPTIONS, THEORIES AND MODELS;Assumptions, theories and models (cont);Assumptions, theories and models (cont);ECONOMICS: WHAT IS IT??;Definition (Cont);What Do Economists “Do”?;Key Concepts and Terms