Notes for a macroeconomics course.
THE NATURE OF ECONOMICS
Economics is a social science concerned with the efficient
utilization of scarce resources, in order to maximally satisfy society's unlimited wants.
II. Functions of Economics
The production, distribution, and consumption of goods and services.
III. Benefits of Economics
A. Most historical, social, and economic changes have economic backgrounds.
B. Governments are increasingly relying on economists for decision-making.
C. Economics teaches us that in the real world every decision we make involves opportunity costs or tradeoffs.
D. Economics helps the citizenry understand how the market, the government, and world politics function.
E. Economics helps the voters make wise public choices at elections.
F. Economics helps people in their personal and business decision-making.
IV. Types of Economics
A study of economic aggregates and policies on the national level, including income, output, the price level, and trade.
A study of how consumers, households, firms, markets, and industries make their economic decisions.
V. Rationality Assumption
Rational people will not make decisions that will cause them to be worse off than before.
VI. The Invisible Hand Concept
The idea that while the participants of the market pursue their self interest, they automatically promote the public welfare. Thus, government must play only a limited role.
VII. The Methodology of Economics
General statements about cause and effect in economic life.
Formal statements of theories showing the relationship between two or more variables.
C. Inductive Logic
Moving from facts to principles (Facts-Theories-Policies)
D. Deductive Logic
Moving from a hypothesis to its proof.
E. ceteris paribus - "all other things being equal" assumption
VIII. Approaches to Economics
A. Descriptive/ Positive Economics
Describes what exists and how it works.
B. Normative/ Applied Economics
Analyzes the outcomes of economic behavior, makes value judgments, and suggests...
Economics As " Is the Study of How a Society, or a Country, or a Business or Even an Individual or a Family Allocates Its Scarce Resources.”
... a business or even an individual or a family allocates its scarce resources." Throughout history, every society has faced the basic economic problem ...
... and costs. B. Is the world running out of scarce resources? CHAPTER 32. PUBLIC CHOICE: THE ECONOMICS OF INTEREST GROUPS I. Collective Decision Making The ... in business. B. Economic/ Pure Profit (Not a cost of production) Profits in excess or Normal Profit. (Total Reve- nues minus Opportunity Cost of ...
... cut production levels and employs fewer resources, reducing demand for labour. oChanges to wage rates A fall in real wages will reduce the spending and borrowing power of consumers, consumers confidence may fall and thus reduce aggregate demand. oOverseas economic conditions ...
... social associations such as country clubs. The medium-level houses are generally area-specific or function specific, and are not easily able to leverage their business through distribution. 4. 2. 3 Competition and Buying Patterns The key element in purchase decisions ...
... the past twenty or so years, great wealth and improved economic and social conditions have been promised to the communities that have embraced ...
This is Study Notes for (The Economy Today 8e, by Schiller) Principles of Economics I Chapters 1-12 most notes straight from the book
... of resources. All government activity must be evaluated in terms of its opportunity cost, that is, the private goods and services forgone to make resources available to the public sector. Allocation decisions within the public sector ...
... the government budget so as to make government consumption Detrimental rather than beneficial for economic development. Misdirected public funds represent a high opportunity cost for ...
... wider social interests in their decision making. Australia is a mixed economy, where the decisions concerning production and distribution are made by a combination of market forces and government decision making. Government intervention ...