Econ 202 Week one notes
Econ 202 Week one notes Econ 202
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This 0 page Class Notes was uploaded by Danielle Notetaker on Wednesday January 6, 2016. The Class Notes belongs to Econ 202 at University of Oregon taught by Urbancic M in Spring2015. Since its upload, it has received 109 views.
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Date Created: 01/06/16
Econ 202 01072016 Day one Intro to economics oiKovouid oikonomia household management quotEconomics is the study of how individuals andsocieties choose to use the scarce resources thatnature and previous generations have providedquot The two key concepts of economics are Scarcity amp Choice Why study economics 1 To learn a way of thinking Opportunity cost Marginalism Ef cient markets 2 To understand society 3 To understand global affairs 4 To be an informed citizen Microeconomics Studies the behavior of decisionmaking units individual rms individual agents or households Macroeconomics Studies the behavior of economic aggregates such as income unemployment and in ation on a national scale Positive vs Normative Statements Positive statements Statements of how the economy does work Descriptive scienti c devoid of value judgments Statements of fact Can be either true or false Normative statements Statements of how the economy should work Realm of values judgments and public policy Statements of opinion No objective way to determine whether they are true Day two Positive Economics Descriptive economics Data Statistics Economic theorv Modem Empirical economics Natural experiments Experimental economics Economic Models An economic model Is a formal statement of a theory May be expressed in words equations or graphs Describes relationships between variables of interest Makes assumptions ceteris paribus all else being equal Is an abstraction or simpli cation of reality quotEssentially all models are wrong but some are usefulquot Four Economic Policy Criteria Efficiency Are outputs produced at the least cost Egu y Is the distribution of income andor wealth fair Growth How fast will the economy grow Stability Can economic uctuations be dampened or tamed The Roots of Macroeconomics The Great Depression was a period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 19305 Economists at the time were puzzled about the causes of the Depression and how best to deal with it Actually modern economists still argue about the origins and persistence of the Great Depression Keynes In 1936 John Maynard Keynes published The General Theory of Employment Interest and Money Keynes believed that governments could and should intervene in the economy and affect the level of output and employment during crises Macroeconomic Concerns Three of the maior concerns of macroeconomics are Output growth Is the number of goods and services produced by the economy increasing Can we induce it to increase faster Unemployment Why are there always at least some people who want to work but can t nd jobs Why does this problem vary over time What can be done to mitigate this In ation de ation How are prices changing overall What causes these price changes in the aggregate Can in ation or de ation be controlled How Measuring Output The main indicator of how an economy is doing is aggregate output which is usually measured in terms of gross domestic product GDP Gross domestic product GDP Functions as a barometer for the economy Gives us a measurement that we can use to analyze economic growth over time Allows us to compare productivities of regions or nations Is not perfectly straightforward some qualities of life not easily captured by numbers Gross domestic product GDP is the total market value of all nal goods and services ie intermediate goods or services don t count produced within a given period ie previously produced goods or services don t count by factors of production located within a country ie goods or services made elsewhere don t count Transfers of money and assets that don t involve the production of a good or service also don t count Three Uses of GDP Data Why are GDP gures useful to examine 1 They help to estimate living standards across time and nanns 2 They help to measure economic growth 3 They help to determine whether an economy is experiencing a shortrun expansion or recession that isto learn more about where we are in the business cycle Measuring Living Standards Total GDP doesn t adjust for population size of country A better measure of measuring the standard of living in a country is per capita GDP Per capita GDP simply means GDP per person that is just take the GDP and divide it by the population Gives the average ie mean living standards in a nation
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